Military Personnel
Management and Oversight of Selective Reenlistment Bonus Program Needs Improvement Gao ID: GAO-03-149 November 25, 2002Because of the recent growth in DOD's Selective Reenlistment Bonus Program, the House Appropriations Committee asked GAO to determine (1) the extent to which the services have followed their criteria for managing their programs and (2) whether DOD has provided adequate guidance for and oversight of the program.
The Navy and Air Force have not used all of the criteria they have established for selecting critical military specialties eligible for bonuses under their Selective Reenlistment Bonus Programs. The Army's guidance does not include specific criteria for selecting critical specialties. Since these services have not used all of their criteria, the number of eligible specialties and the number of enlisted personnel who receive bonuses have expanded. Moreover, the services did not manage their programs to stay within their budgets appropriated by Congress. The Department of Defense's (DOD) budget for the Selective Reenlistment Bonus Program has more than tripled in recent years--from $235 million in fiscal year 1997 to an estimated $789 million in fiscal year 2002. DOD has not provided adequate guidance for and oversight of its Selective Reenlistment Bonus Program. DOD canceled an instruction that established criteria for selecting specialties for the program. Without this instruction, DOD cannot be sure that the program is being implemented as intended. Also, DOD has not reviewed the services' processes for selecting critical specialties or for establishing their corresponding bonus levels, despite requirements to do so annually. Thus, DOD has not ensured that the services are implementing their programs appropriately to help improve short-term retention in critical military specialties
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-149, Military Personnel: Management and Oversight of Selective Reenlistment Bonus Program Needs Improvement
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Report to the Chairman, Subcommittee on Defense, Committee on
Appropriations, House of Representatives:
United States General Accounting Office:
GAO:
November 2002:
MILITARY PERSONNEL:
Management and Oversight of Selective Reenlistment Bonus Program Needs
Improvement:
Reenlistment Bonus Program:
GAO-03-149:
GAO Highlights:
MILITARY PERSONNEL:
Management and Oversight of Selective Reenlistment Bonus Program
Needs Improvement:
Why GAO Did This Study:
Because of the recent growth in DOD‘s Selective Reenlistment Bonus
Program, the House Appropriations Committee asked GAO to determine
(1) the extent to which the services have followed their criteria
for managing their programs and (2) whether DOD has provided adequate
guidance for and oversight of the program.
What GAO Found:
The Navy and Air Force have not used all of the criteria they have
established for selecting critical military specialties eligible for
bonuses under their Selective Reenlistment Bonus Programs. The Army‘s
guidance does not include specific criteria for selecting critical
specialties. Since these services have not used all of their criteria,
the number of eligible specialties and the number of enlisted personnel
who receive bonuses have expanded. Moreover, the services did not
manage their programs to stay within their budgets appropriated by
Congress.
The Department of Defense‘s (DOD) budget for the Selective Reenlistment
Bonus Program has more than tripled in recent years”from $235 million
in
fiscal year 1997 to an estimated $789 million in fiscal year 2002.
DOD has
not provided adequate guidance for and oversight of its Selective
Reenlistment
Bonus Program. DOD canceled an instruction that established criteria
for
selecting specialties for the program. Without this instruction, DOD
cannot
be sure that the program is being implemented as intended. Also,
DOD has
not reviewed the services‘ processes for selecting critical
specialties
or for establishing their corresponding bonus levels, despite
requirements
to do so annually. Thus, DOD has not ensured that the services
are
implementing their programs appropriately to help improve
short-term
retention in critical military specialties.
Service‘s Selective Reenlistment Bonus Program Budgets, Fiscal
Years 1997-2002:
[See PDF for Image]
[End of Figure]
What GAO Recommends:
GAO recommends that until DOD issues required program guidance
* the services manage their programs to stay within requested
budgets and
* the services adhere to their established guidance. The
Army should
establish specific guidance for selecting specialties for
inclusion
in its program.
GAO also recommends that the Secretary of Defense require the
Undersecretary for Personnel and Readiness to
*issue an instruction that provides the services with guidance
for
administering and selecting specialties for inclusion in their
Selective Reenlistment Bonus Programs, and
*conduct annual reviews of the services‘ programs as required by
DOD‘s directive.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Derek Stewart at (202) 512-5559
or stewartd@gao.gov.
Contents:
Letter:
Results in Brief:
Background:
Not Using All Criteria Expanded the Number of Specialties and
Reenlistees:
DOD Has Not Provided Adequate Guidance and Oversight:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: How the Selective Reenlistment Bonuses Are Paid:
Appendix III: Growth of the Services‘ Selective Reenlistment Bonus
Programs and Initial Payments:
Appendix IV: Comments from the Department of Defense:
Tables:
Table 1: Selective Reenlistment Bonus Program Characteristics by
Service, Fiscal Year 2001:
Table 2: Selective Reenlistment Bonus Program Characteristics by
Service, Fiscal Years 1997 and 2001:
Table 3: Eligibility for Zones A, B, and C under the Selective
Reenlistment Bonus Program:
Figures:
Figure 1: Services‘ Selective Reenlistment Bonus Program Budgets,
Fiscal Years 1997-2002:
Figure 2: Cost of the Selective Reenlistment Bonus Program in Constant
2002 Dollars, Fiscal Years 1990-2002:
Figure 3: Army‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
Figure 4: Navy‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
Figure 5: Marine Corps‘ Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
Figure 6: Air Force‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
Abbreviations:
DOD Department of Defense
GAO General Accounting Office:
United States General Accounting Office:
Washington, DC 20548:
November 25, 2002:
The Honorable Jerry Lewis
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives:
Established by Congress in 1974, the Department of Defense‘s (DOD)
Selective Reenlistment Bonus Program for enlisted military personnel is
DOD‘s primary tool for addressing short-term retention problems in
critical military specialties (or skills). It allows the services to
pay bonuses ranging from a few thousand dollars up to $60,000 to entice
enlisted personnel in selected specialties to reenlist for another term
in the military. The bonus amounts vary, mainly on the basis of the
services‘ needs in certain critical specialties and the length of
reenlistment. Fifty percent of the bonuses are paid in initial bonus
payments and the remaining 50 percent in equal anniversary payments for
each year of reenlistment. Between fiscal years 1997 and 2002, the cost
of this program more than tripled--from $235 million in fiscal 1997 to
an estimated $789 million in fiscal 2002. The services‘ total budget
requests for the program have continued to increase even though the
U.S. economy has slowed.
Concerned about the recent growth of DOD‘s Selective Reenlistment Bonus
Program, you asked us to review how the military services are
administering this program to retain enlisted personnel in critical
military specialties. Specifically, our objectives were to determine
(1) the extent to which the services followed their criteria for
managing the Selective Reenlistment Bonus Program and (2) whether DOD
provided adequate guidance for and oversight of the program.
Our work was limited to the services‘ Selective Reenlistment Bonus
Programs that encompassed enlisted specialties between fiscal years
1997 and 2002. Our report is limited to data through fiscal year 2001,
the last year for which official program data are available. We
conducted our review from January through August 2002 in accordance
with generally accepted government auditing standards. (See app. I for
more information on our scope and methodology.):
Results in Brief:
The Navy and Air Force have not used all of the criteria established in
their guidance for selecting critical military specialties eligible for
bonuses under their Selective Reenlistment Bonus Programs. For example,
although the Navy‘s regulations require a ’balanced application“ of all
the criteria used for determining which occupations belong in the
program, according to Navy officials, an occupation must meet only one
of five criteria to become eligible. According to a DOD review of the
selective reenlistment bonus program, this is not appropriate since a
particular skill could be a good candidate on the basis of several
criteria but inappropriate on the basis of only one. The Army‘s
guidance does not include specific criteria for selecting critical
specialties, meaning that the Army can select any number of
specialties. Our review found that Marine Corps managers generally used
all of the criteria as required. Since 1997, the services have expanded
the number of eligible specialties and the number of enlisted personnel
who receive reenlistment bonuses. For all the services combined, the
total number of reenlistees receiving bonuses more than doubled, from
approximately 23,000 in fiscal year 1997 to almost 59,000 in fiscal
2001. At the same time, average bonuses have increased. Moreover,
during the same period, the Army, Navy, and Air Force did not manage
their programs to stay within their budgets appropriated by Congress.
Specifically, although Congress appropriated an additional $165 million
above the services‘ budget requests during fiscal years 1997-2001, the
three services spent over $240 million dollars more on initial bonus
payments than Congress had appropriated. These factors--the
inconsistent use of criteria, increases in the number of specialties
and reenlistees, paying higher bonuses, and not managing their programs
to stay within appropriated budgets--have contributed to program costs
that have more than tripled since fiscal year 1997.
DOD has not provided adequate guidance for and oversight of its
Selective Reenlistment Bonus Program. While DOD issued a directive and
an instruction in 1985 to provide the services with guidance for
administering their programs, it canceled the instruction in 1996. The
instruction established criteria that the services should apply when
selecting specialties for inclusion in the program. Without this
instruction, DOD cannot be sure that the program is being implemented
as intended and that adequate internal controls are in place to govern
the operations of the services‘ programs. Also, DOD has not reviewed
the services‘ processes for selecting critical specialties, despite
requirements in the directive to do so annually. Thus, DOD has not
ensured that the services are implementing their programs appropriately
to help improve short-term retention in critical military specialties.
Although we raised similar concerns in a 1996 report, DOD has taken no
action on our recommendation to provide more explicit guidance
regarding the selection of critical specialties. Consequently, the
problems we identified then remain unaddressed today. Although DOD‘s
comptroller reviews the services‘ annual program budget requests, these
budget reviews do not include a substantive review of the program. For
example, one review failed to discover a flawed budget estimate of $34
million in unneeded funding for anniversary payments.
We are making recommendations to improve the services‘ management of
the Selective Reenlistment Bonus Program and DOD‘s oversight
responsibilities. In response to our report, DOD disagreed with our
conclusion that it cannot be sure that the Selective Reenlistment Bonus
Programs are being implemented as intended. DOD stated that the
criteria that the services use to administer their programs are sound
and that they allow the services to target their resources to meet the
services‘ unique retention needs. DOD concurred with our recommendation
to issue an instruction that provides the services with guidance for
administering their programs and partially concurred with our other
recommendations. In addressing our recommendations, DOD raised concerns
about the services‘ potential loss of flexibility to respond to
external factors and objected to an additional administrative
requirement. Finally, DOD stated that the program is routinely reviewed
and that each service prepares a plan for using the bonuses that is
carefully reviewed as part of the budget process. The agency comments
section of this report contains more details on DOD‘s positions and our
response to them.
Background:
In 1974, DOD requested congressional approval to target its
reenlistment bonus program toward critical specialties where it was
experiencing staffing shortfalls. Before 1974, the military had
provided a $2,000 reenlistment bonus for all servicemembers willing to
reenlist. During that year, DOD raised concerns that the bonus program
was not focused enough to meet the services‘ needs. In 1974, Congress
authorized the use of selective bonuses, which gave the services
flexibility to adjust the bonuses paid to reenlistees to aid in
staffing the most hard-to-fill critical specialties.[Footnote 1]
Overall, the Selective Reenlistment Bonus Program is intended to
increase reenlistments in specialties deemed critical by the Secretary
of Defense.
To implement the Selective Reenlistment Bonus Program, DOD issued a
directive in 1985,[Footnote 2] updated in 1996, which assigns specific
responsibilities for administering the program to the Office of the
Secretary of Defense and to the services‘ Secretaries. Under this
directive, the Assistant Secretary of Defense for Force Management
Policy, under the Under Secretary of Defense for Personnel and
Readiness, is responsible for establishing procedures for administering
the selective reenlistment bonus program. Specifically, the Assistant
Secretary of Defense for Force Management Policy is responsible for
establishing (1) criteria for designating military specialties that
qualify for bonuses, (2) criteria for individual members‘ eligibility
for bonuses, and (3) reporting and data requirements for the annual
review and evaluation of programs as well as individual services‘
requests for military skill designations. In addition, according to the
DOD directive, the Assistant Secretary of Defense for Force Management
Policy is responsible for annually reviewing and evaluating the
services‘ enlisted personnel bonus programs in conjunction with the
annual budget cycle. These reviews are to include an assessment of the
criteria used for designating critical military specialties. As a
result of these reviews, the Office of the Secretary of Defense is to
make the revisions needed to attain specific policy objectives.
At the same time that DOD issued its 1985 directive, it issued an
instruction providing the services with guidance for managing their
programs. However, this instruction was canceled in 1995, and
replacement guidance has not been issued, although the updated
overarching directive remains in effect. DOD did not issue replacement
guidance because of administrative and legal questions that have only
recently been resolved, thus clearing the way for reissuance of the
guidance. The canceled instruction was to require the services to
provide a balanced evaluation of five factors in identifying critical
specialties: a consideration of (1) serious understaffing in adjacent
years, (2) persistent shortages in total career staffing, (3) high
replacement costs, (4) the arduousness or unattractiveness of the work,
and (5) whether the specialty is essential to the accomplishment of
defense missions. In addition, the instruction was to require that a
reasonable prospect must exist for enough improvement in the occupation
to justify the cost of providing the bonus. The instruction was also to
require the services to provide DOD with reports on the status of their
programs and on the status of the specialties included in their
programs.
The Selective Reenlistment Bonus Program has experienced substantial
cost growth, as shown in figure 1. DOD‘s budget for the Selective
Reenlistment Bonus Program has more than tripled in recent years--from
$235 million in fiscal year 1997 to an estimated $789 million in fiscal
2002. The Air Force‘s reenlistment bonus budget increased
proportionately more than the other services--from $26 million in
fiscal year 1997 to over an estimated $258 million in fiscal 2002.
Figure 1: Services‘ Selective Reenlistment Bonus Program Budgets,
Fiscal Years 1997-2002:
[See PDF for Image]
[End of Figure]
How the Selective Reenlistment Bonus Program Works:
DOD‘s Selective Reenlistment Bonus Program currently allows the
services to pay reenlistment bonuses of up to $60,000, though the
services have set different maximums. The service secretaries designate
which specialties are eligible to receive bonuses. (See app. II for
more discussion of bonus determinations.) Total bonus amounts are
determined by multiplying (1) the service member‘s current monthly
basic pay by (2) the number of additional years of obligated service
and by (3) a bonus multiple that can range from 0.5 to 15. The bonus
multiples are determined by each service for all specialties they deem
critical. For example, an enlistee who earns $24,000 per year and
reenlists for 4 years in an occupation with a multiple of 4 would
receive a reenlistment bonus of $32,000. This amount is calculated by
multiplying the monthly basic pay of $2,000 by the number of
reenlistment years (4) and by the multiple (4). The bonus multiples are
determined by each service for all eligible specialties, and the
occupations that they deem most critical or hardest to fill would
generally receive higher multiples. Navy officials told us that they
also consider alternative wages that certain specialties can obtain
outside of the military when determining the size of the bonus
multiplier for a critical specialty.
Each of the services has established its own guidance for implementing
its selective reenlistment bonus program. This guidance varies by
service. Generally, the services‘ guidance establishes eligibility
criteria for servicemembers and in some cases also defines criteria for
selecting specialties for inclusion in the program. The Navy and Marine
Corps have adopted all the original criteria that were established by
DOD‘s 1985 program instruction. The Air Force updated its program
guidance in 1998, which only partially reflected DOD‘s original program
instruction. This instruction includes the criteria for individual
servicemembers‘ eligibility as well as guidance for the selection of
specialties. The Army has established guidance for individual
servicemembers‘ participation in the program but not specific guidance
for determining which specialties should be included in the program.
In addition to establishing their own guidance for selecting
individuals and occupations to include in the program, the services
have also defined some other program characteristics, which also differ
between the services as shown in table 1 for fiscal year 2001. While
congressional authorization allows the maximum amount of a bonus to be
$60,000 and the maximum multiple to be 15, the services determine their
own limit. In fiscal year 2001, the maximum bonus ranged from $35,000
to $60,000, and the services‘ maximum bonus multiple ranged from 5.0 to
8.0. The table also displays the minimum and maximum reenlistment
periods.
Table 1: Selective Reenlistment Bonus Program Characteristics by
Service, Fiscal Year 2001:
Program characteristic: Maximum bonus; Army: $40,000[A]; Navy: $60,000;
Marine Corps: $35,000; Air Force: $60,000.
Program characteristic: Maximum multiple; Army: 5.0; Navy: 8.0; Marine
Corps: 5.0; Air Force: 6.0.
Program characteristic: Minimum obligation; Army: 3 years; Navy: 3
years; Marine Corps: 4 years; Air Force: 4 years.
Program characteristic: Maximum obligation; Army: 6 years; Navy: 6
years; Marine Corps: 6 years; Air Force: 6 years.
Source: The services‘ regulations and guidance.
[A] The Army authorizes two specialties (Satellite Communication
Systems Operator-Maintainer and Korean Voice Interceptors) to reenlist
for as much as $40,000 if servicemembers qualify. The Army‘s remaining
occupations are limited to a maximum reenlistment bonus of $20,000.
[End of table]
The Army, Navy, and Air Force pay bonuses to reenlistees with an
initial payment and equal annual installments over the reenlistment
period. The initial payment is made at the time of the reenlistment or
when the reenlistment period begins and is equal to 50 percent of the
total bonus. The remaining 50 percent is paid in equal annual payments
over the term of the reenlistment, and the payments are called
’anniversary payments.“ In the example above, the initial 50-percent
payment would be $16,000, and the anniversary payments would be $4,000
for 4 years. Starting in fiscal year 2001, the Marine Corps began
paying the entire bonus in one lump-sum payment at the beginning of the
reenlistment period. It is too early to determine what effect this
change will have on the operation of the Marine Corps‘ selective
reenlistment bonus program.
Not Using All Criteria Expanded the Number of Specialties and
Reenlistees:
For fiscal years 1997-2001, some services did not consistently apply
all the criteria they had established to select which specialties they
include in the reenlistment program. By not doing so, they broadened
the number of eligible specialties and reenlistees who received
bonuses. While achieving higher reenlistments, the services have not
managed their programs to stay within their congressionally
appropriated budgets. As a result, the services spent more on their
program than was appropriated in each of fiscal years 1997-2001.
Some Services Do Not Consistently Use All of the Criteria They Have
Established for Selecting Specialties That Receive Bonuses:
Some services are not consistently using all of the criteria they have
established to select critical specialties for the Selective
Reenlistment Bonus Program. The Navy and Marine Corps have adopted the
original DOD instruction (see background, p. 6), which requires a
balanced application of all five criteria to identify critical
specialties. Marine Corps officials told us that they utilize all of
these criteria in selecting specialties eligible for a bonus. However,
the Navy uses only the following four criteria when identifying
specialties for inclusion in the program: (1) severe undermanning, (2)
severe career undermanning, (3) high training and replacement costs,
and (4) skills essential to accomplishing the defense mission.
According to Navy officials, any one of these criteria qualifies a
specialty for inclusion in the program. According to DOD‘s only review
of the selective reenlistment bonus program, this is not appropriate,
since a particular skill could be a good candidate on the basis of
several criteria, but inappropriate on the basis of one.
While the Air Force considers numerous factors when making
determinations about which occupations to include in its program, it
does not prioritize its occupations as required by Air Force
instructions. As a result, the bonuses paid may not reflect the
importance of the specialty. The Air Force has adopted most of the
original DOD criteria; however, it does not require a balanced
application of those criteria. The Air Force‘s criteria include (1)
shortfalls in meeting current and projected reenlistment objectives
(reenlistment rates and the size of specific-year groups, as well as
adjacent-year groups), (2) shortages in current and projected
noncommissioned officer manning, (3) high training investment and
replacement cost for a skill, (4) expected improvement in retention
resulting from designation as a selective reenlistment bonus skill, and
(5) priority of the skill. An Air Force review board considers the
criteria, and then a professional judgment is made on whether to
include a skill in the program.
The Army has not adopted all of DOD‘s original criteria. The Army has
established regulations governing the eligibility of individuals for
inclusion in the program, but it has not established regulations for
selecting occupations to include in its program. As a result, the
specialties that the Army selects for bonuses may not be critical.
According to Army officials, the criteria can fluctuate depending on
their current needs. During fiscal year 2002, the Army‘s criteria for
selection of critical specialties included (1) budget constraints, (2)
current and projected strengths, (3) retention rates, (4) training
constraints, (5) replacement costs, (6) priority military occupational
specialties, and (7) shortages within mid-grade levels. The Army uses
understaffing as the primary criterion for designating occupations as
critical and eligible for bonuses.
Growth in the Number of Specialties and Reenlistees:
The services, with the exception of the Marine Corps, have not been
applying all of their criteria for selecting specialties to include in
their Selective Reenlistment Bonus Programs. This has led to an
increase in the number of specialties that the services made eligible
for reenlistment bonuses during fiscal years 1997-2001. As the number
of specialties eligible for bonuses grew, so did the number of
reenlistments receiving bonuses from each service. (See table
2.)[Footnote 3] In fiscal year 2001, the Navy awarded bonuses to the
smallest percentage of specialties of the services, but those awards
accounted for the largest number of bonus recipients. The Air Force
awarded bonuses to approximately 80 percent of its specialties, which
were paid to 42 percent of its reenlistees.
Between 1997 and 2001 all of the services increased the number of
specialties for which they offered reenlistment bonuses. As a result,
there was an increase in the total number of reenlistees who got
bonuses. For all the services combined, the total number of reenlistees
receiving bonuses more than doubled--from approximately 23,000 in
fiscal year 1997 to almost 59,000 in fiscal 2001. Along with this
growth in the number of specialties and reenlistees receiving bonuses
has been an increase in the average bonus paid--from approximately
$5,500 in fiscal year 1997 to over $8,000 in fiscal 2001. In constant
2001 dollars, the average initial bonus payment has grown from
approximately $5,900 in fiscal year 1997 to over $8,000 in fiscal 2001.
The Navy had the greatest increase in average initial payments--from
over $7,200 in fiscal year 1997 to almost $11,000 in fiscal 2001. The
Air Force average initial payment also increased--from approximately
$3,900 in fiscal year 1997 to $7,100 in fiscal 2001. Unlike the other
services, the Army‘s average bonus fell by $500 between fiscal years
1997 and 2001.
Table 2: Selective Reenlistment Bonus Program Characteristics by
Service, Fiscal Years 1997 and 2001:
[See PDF for Image]
[End of table]
Services‘ Programs Not Managed to Stay Within Appropriated Budgets:
From fiscal year 1998 through fiscal 2001, none of the services‘
Selective Reenlistment Bonus Programs stayed within their appropriated
program budgets. Rather, with the exception of the Marine Corps, the
services reprogrammed or realigned funds from other programs within the
enlisted personnel budget to make more bonus payments than they were
originally funded to pay. The services are able to do this under their
budget authority. However, they are restricted from shifting funding
amounts of over $10 million from other budget authority lines, such as
from officer pay programs, without seeking congressional prior approval
for reprogramming of resources.
Overall, we found that the Army, Navy, and Air Force did not manage
their programs to stay within their budgets appropriated by Congress.
Rather, with the exception of the Marine Corps, the services have
allowed their program to continue running the entire fiscal year and
have exceeded their budget appropriation during the past several years.
(See app. III for more detail on budget requests and actual initial
bonus payments.) Even though Congress provided $165 million in
additional funding during fiscal years 1997-2001, the three services
spent approximately $240 million dollars more on initial bonus payments
than Congress had appropriated. During fiscal years 1997-2001, the Navy
exceeded its appropriated budget by more than $121 million; the Air
Force, by $70 million; and the Army, by about $49 million. However,
these services pay 50 percent of their bonuses up front as initial
payments and pay the remaining 50 percent in annual installments over
the reenlistment period. Consequently, they have to pay an additional
$240 million in anniversary payments in future years. This means that
the total cost of the over expenditures on initial payments made during
fiscal years 1997-2001 could be as much as $480 million.
Management of Selective Reenlistment Bonus Program:
Although the Army, Navy, and Air Force have periodically reviewed their
programs during the fiscal year, they have made few adjustments to the
program to stay within their appropriated budgets. With the exception
of the Marine Corps, the services either do not establish goals for
improvement in critical specialties or manage their programs to stay
within the goals they have set. For example, while the Navy does
establish retention goals for specialties included in the program, it
does not prioritize its specialties and modify the bonuses, as needed,
to stay within those goals. For example, in fiscal year 2001, the Navy
exceeded its goals in 75 specialties by more than 110 percent. By
exceeding its goals in some occupations, the Navy may be neglecting
other specialties that could utilize increased bonuses to improve
retention. For example, we found 64 specialties that were below 90
percent of the retention goal for fiscal year 2001. In 50 cases, the
Navy reduced the multiples (12) or made no change (38) for these
specialties from fiscal year 2000.
During fiscal year 2002, the services experienced a strong recruiting
and retention year, which, according to service officials, caused the
Army and Navy to scale back or close their programs. The Army expected
to exceed its fiscal year 2002 program budget estimates by over $45
million and closed its program 45 days prior to the end of the fiscal
year. These actions were taken after both services had exceeded their
budgets for fiscal year 2002. The Navy lowered the bonus amounts paid
during fiscal year 2002 after acknowledging that it would exceed its
fiscal year 2002 appropriation if these actions were not taken.
Starting in fiscal year 2001, the Marine Corps instituted a plan to
close its program when the budget limit was met. The Marine Corps
closed its program in July 2002, since the appropriated budget was met
at that time.
Factors Influencing Growth:
According to some service officials, three key factors combined to
cause the services to increasingly rely on the Selective Reenlistment
Bonus Program to staff critical specialties during fiscal years 1997-
2001. These factors were (1) the downsizing of the U.S. military forces
during the 1990s, (2) a decline in recruiting in the early to mid-
1990s, and (3) fewer reenlistments during the late 1990s. The
combination of these factors, according to service officials, has
contributed to growth in costs during fiscal years 1997-2002. According
to the Congressional Research Service, the shortfalls in recruiting and
retention in fiscal years 1998-1999 were the first since fiscal 1979.
Regarding downsizing, the U.S. military substantially reduced its
number of active-duty military personnel after the end of the Cold War.
During fiscal years 1990-1999, the number of active-duty enlisted
personnel declined from 1.7 million to 1.2 million--approximately 34
percent. Part of this reduction in the military force was due to a
reduction in the services‘ recruiting goals. For example, DOD‘s
recruiting goals decreased consistently from 229,172 in fiscal year
1990 to as low as 174,806 in fiscal 1995 before increasing again in the
years following. One of the intended purposes of reducing these goals
was the desire to arrive at a smaller force by decreasing new
enlistments instead of forcing more experienced personnel to leave the
military. However, according to DOD officials, fewer new enlistments in
the mid-1990s produced too few enlisted personnel to meet the services‘
needs for mid-level personnel (those with 5-10 years of experience) in
the late 1990s.
The services had varying degrees of success in achieving their higher
recruiting goals in the late 1990s. For example, in fiscal year 1999,
the Army failed to meet its goal--recruiting only 95 percent of its
target. The Navy and the Army also failed to meet their recruiting
goals in fiscal year 1998, recruiting 88 and 92 percent, respectively.
These failures to achieve recruiting goals were perceived by the
services as a serious problem because of its potential impact on the
force structure.
The services also experienced retention problems that coincided with
the recruiting shortfalls. While the Army achieved its reenlistment
goals for first-term and mid-career enlisted personnel, shortfalls
occurred in the career reenlistment term. For example, during fiscal
years 1996-1998, the Army‘s reenlistment rates for the eligible
population decreased from 65.7 to 60.1 percent. First-term reenlistment
rates for the Navy decreased consistently during 1996-1999 from a
reenlistment rate of 32.9 percent of the eligible population to 28.2
percent. Also, during fiscal years 1998-2000, the Air Force did not
meet its aggregate retention goal of 55 percent for first-term
personnel, getting 54, 49, and 52 percent, respectively.
DOD Has Not Provided Adequate Guidance and Oversight:
DOD canceled the instruction containing criteria for the Selective
Reenlistment Bonus Program in 1995 and has not replaced it. According
to DOD officials, there were administrative impediments that involved
the recoupment of reenlistment bonuses from some servicemembers who
leave the military because of disciplinary actions initiated by DOD.
These administrative impediments were resolved in fiscal year 2002 and
have cleared the way for issuance of a new DOD instruction. Also, DOD
has not provided adequate oversight nor conducted the reviews over the
program that its directive, which is still in effect, requires. In the
absence of DOD criteria and oversight, the services have not been held
accountable for using any criteria to designate critical specialties or
to report to DOD how they select the specialties. As a result, the
services have expanded their programs to include specialties that may
not be critical to their missions. In addition, the DOD comptroller
conducts only limited reviews of the budgets the services submit for
the program each year. As a result, DOD has not assured that the
increases in the services‘ Selective Reenlistment Bonus Programs
budgets each year were justified.
DOD Has Not Replaced Essential Program Guidance:
The Office of the Secretary of Defense has not followed the DOD
directive requiring it to establish guidance for the services to use in
administering the reenlistment bonus programs. According to the
directive, DOD is responsible for providing the services with guidance
to ensure proper program administration through an instruction on (1)
establishing criteria for designating the military skills eligible for
bonuses, (2) determining individual members‘ eligibility for awards,
and (3) establishing reporting and data requirements for the review and
evaluation of annual programs and individual requests for military
skill designations. Without this instruction, the services have not had
clear direction on how to manage their programs. DOD is currently
updating the instruction, and officials stated that they intend to
issue it sometime during 2003.
DOD Oversight Has Been Limited:
The Office of the Secretary of Defense has provided only limited
oversight, which has resulted in little feedback to the services on the
administration of their selective reenlistment bonus programs. DOD has
conducted only one comprehensive review of the program (in 1991) to
determine the best use of resources. Currently, although the Office of
the Secretary of Defense is responsible for monitoring and conducting
ongoing oversight, it does not conduct detailed annual reviews of the
program as required by its directive. Furthermore, although DOD‘s
Comptroller conducts periodic program reviews, these reviews are
limited to the services‘ budget submissions and their justification. In
addition, the comptroller‘s recently initiated recruiting and retention
hearings devote only a small part of the meetings to reviewing each
service‘s Selective Reenlistment Bonus Program.
DOD Has Conducted No Comprehensive Program Review Since 1991:
The Office of the Secretary of Defense has not complied with its
directive that requires that the office conduct annual Selective
Reenlistment Bonus Program reviews. These reviews are intended to
assess the services‘ programs in conjunction with the annual program
budget reviews and to result in recommendations to the Secretary of
Defense for measures required to attain the most efficient use of
resources. DOD acknowledged that these reviews have not been conducted
in recent years, but it is currently taking steps to restart reviews of
the services‘ programs and told us that it plans to complete these
reviews by March 2003. In addition, DOD is required by directive to
annually review the criteria used to designate eligible military skills
and to make any changes needed to attain specific policy objectives.
However, DOD has not conducted these annual reviews. Moreover, it has
not reviewed the services‘ processes for establishing their
reenlistment bonus programs.
The last comprehensive review of the program was conducted in 1991.
However, the services were not required to respond to the findings of
the 1991 review and consequently did not take any action on the
findings, and DOD has not conducted any subsequent reviews of this
nature. The 1991 review found that the program was generally well
managed. However, the review raised concerns about the general nature
of the guidance provided to the services and raised questions about 34
percent of the services‘ specialties eligible for bonuses. In addition,
the review noted that a ’balanced“ application of all the criteria
contained in DOD‘s instruction was needed to ensure that only critical
specialties were selected. The report specifically noted that staffing
shortfalls alone were not sufficient criteria to qualify an occupation
for inclusion in the program. While chronically undermanned, the report
noted that musicians would not be considered critical for the
fulfillment of defense missions and thus would not receive a bonus. The
report noted that none of the services, at that time, provided
selective reenlistment bonuses for musicians. However, the Army is
currently offering bonuses to some musician specialties on the basis of
chronic understaffing in those areas.
In a 1996 report, we raised similar concerns regarding the management
and oversight that DOD was providing the program with in, among other
aspects, determining which skill categories should receive
bonuses.[Footnote 4] In that report, we noted that the Office of the
Secretary of Defense had not provided adequate guidance for and
oversight of the Selective Reenlistment Bonus Program. Additionally, we
noted that its guidance to the services for determining which
specialties categories should receive bonuses was too general in
nature. As a result, each service used a different procedure for
identifying which specialty categories were to receive retention
bonuses. With regard to oversight, while DOD guidance required detailed
annual reviews of the specialty categories that the services planned to
include in their programs, DOD had not conducted these reviews. Our
report recommended that DOD (1) provide more explicit guidance
regarding the determination of shortage categories and eligibility for
bonuses and require the services to establish and document more
specific criteria for determining which skills will receive bonuses and
(2) monitor the services‘ adherence to this guidance. DOD took no
action on our recommendations, and the program has continued to grow
unconstrained since.
Comptroller Conducts Limited Review of Program Budget Requests:
DOD‘s Comptroller conducts limited annual reviews of the services‘
program budget submissions. According to the analysts responsible for
these reviews, they review high-level program summaries that do not
provide insights into the details of how the program is run. They
essentially review the services‘ budget estimates and a small sampling
of specialties that the services represent as their top retention-
critical specialties. We found that these reviews were limited because
of the small number of skills considered by the review, and we
questioned some specialties that the services included in their top
retention-critical specialties. We found some specialties that had
appeared on the services‘ lists for several years were not receiving
the highest bonuses. For example, the Navy listed the service
occupation of Cryptologic Technician (Collection)[Footnote 5] as being
critically undermanned during fiscal years 1997-2002. However, the
bonus multiplier for this specialty has not been higher than 4.5 during
this time frame and was lowered to 4.0 in fiscal year 2001. During that
year the Navy retained only 160, or 82 percent, of the goal of 194 (out
of 431 potential retainees) Cryptologic Technicians.
Because of the general nature of its reviews, the DOD Comptroller‘s
analysts did not identify inaccuracies in the services‘ budget
estimates because of the general nature of their reviews. For example,
in two instances, the services overestimated the amount of their
anniversary payments and used the additional funds to make initial
payments. For example, in fiscal year 2001, the Army overestimated its
anniversary payments by $9 million. In fiscal year 2002, the Air Force
overestimated its anniversary payments by approximately $17 million.
According to service officials, these estimates are easy to calculate;
since they are obligations incurred from the previous years‘ bonus
programs and are known amounts. These unbudgeted initial payments also
resulted in an additional obligation of $26 million that must be paid
in future years, since these services pay 50 percent of their bonuses
up front and must pay the remaining 50 percent over the reenlistment
period (a total of $52 million).
Conclusions:
The Selective Reenlistment Bonus Program was intended to help the
services meet short-term retention problems in selected critical
specialties. Instead, the services have broadened the number of
specialties included in the program by not using all of their criteria
to selectively target critical specialties. As a result, the number of
eligible specialties and the corresponding number of enlisted personnel
included in the program have increased significantly. The growth in the
number of eligible specialties and enlisted personnel who receive
reenlistment bonuses may well continue if actions are not taken to
constrain this expansion. Actions that may constrain the program‘s
growth include requiring the services‘ to adhere to criteria they have
already established for selecting critical specialties and by DOD‘s
issuing an instruction governing the operation of the program. While
several factors influenced the program‘s growth in recent years, it is
likely that the impact of these factors could have been mitigated if
DOD had replaced the canceled instruction and had exercised appropriate
oversight. Without an instruction to guide the services, DOD cannot be
sure that the program is being implemented as intended and that
adequate internal controls are in place to govern the operations of the
services‘ programs. Without clear DOD guidance and oversight, managing
the program and justifying its growth are difficult. In 1996, we raised
concerns about the lack of oversight that DOD was providing the program
in, among other aspects, determining which skill categories should
receive bonuses. The Office of the Secretary of Defense could have
exercised more effective controls over the services‘ management of
their programs, had it followed our recommendations to provide
appropriate guidance and more active oversight.
Recommendations for Executive Action:
In the absence of a DOD instruction governing the services‘
implementation of the program, we recommend that the Secretary of
Defense require the services to do the following:
* Apply all the criteria they have established for selecting critical
specialties under their Selective Reenlistment Bonus Programs. In the
case of the Army, criteria should be established for selecting critical
specialties.
* Manage their programs to stay within their appropriations or, if
circumstances require, provide the Office of the Secretary of Defense
with adequate justification for increased expenditures over
appropriated amounts.
To improve DOD‘s oversight and the services‘ management of the
Selective Reenlistment Bonus Program, we recommend that the Secretary
of Defense require that the Undersecretary for Personnel and Readiness:
* issue an instruction that provides the services with guidance for
administering and selecting specialties for inclusion in their programs
and:
* conduct annual reviews of the Selective Reenlistment Bonus Program as
required by DOD‘s directive.
Agency Comments and Our Evaluation:
DOD provided official comments on a draft of this report. DOD did not
agree with the report‘s conclusion that the Department cannot be sure
that the Selective Reenlistment Bonus Programs are being implemented as
intended. While DOD stated that program controls are in place to ensure
a reasonable balance between oversight and execution, we found that
fundamental management controls were not in place. For example, DOD
canceled the key instruction that provides the services with essential
guidance for administering their programs 7 years ago and has not
replaced it. Also, the comptroller‘s budget reviews of the services‘
programs were limited and, in some cases, were not effectively
performed. Furthermore, these budget reviews were never intended to
provide detailed programmatic oversight. Office of the Secretary of
Defense officials told us that detailed programmatic reviews required
by DOD‘s directive had not been conducted since 1991. Consequently,
without these essential management controls, it is not clear how the
Department can be sure that the program is being implemented as
intended.
DOD concurred or partially concurred with our recommendations. Our
evaluation of DOD‘s comments on these recommendations follows:
DOD concurred with our recommendation to issue an instruction that
provides the services with guidance for administering their programs.
The Department stated that it has drafted and is staffing a new DOD
Instruction 1304.22 that will govern the procedures for administering
the program.
DOD partially concurred with our recommendation that the Secretary of
Defense require the services to apply all the criteria they have
established for selecting specialties under their Selective
Reenlistment Bonus Programs. DOD stated that its criteria are sound and
that the services‘ processes are balanced. As we noted in our report,
the Department‘s instruction that was canceled required a balanced
application of five criteria. We found that the services do not always
apply their criteria in a balanced fashion. DOD also stated that,
although the Army does not have a regulation governing its Selective
Reenlistment Bonus Program, the criteria it uses are sound. However, we
found that the Army‘s criteria are not clearly defined. Therefore, it
is difficult to determine whether the criteria are being applied in a
balanced fashion. Not using all the criteria allows the number of
specialties included in the program to expand with a corresponding
increase in reenlistments. For example, the number of Army
reenlistments with bonuses more than doubled from approximately 7,000
in fiscal year 1997 to over 17,000 in fiscal 2001. DOD also stated that
it does not use the program to address aggregate end-strength goals. We
did not intend to infer that the program is being used to meet
aggregate end-strength goals. We removed the discussion of the services
use of the program to meet aggregate end-strength goals from the
report.
DOD partially concurred with our recommendation that the services
manage their programs to stay within their appropriations or, if
circumstances require, provide the Office of the Secretary of Defense
with adequate justification for increased expenditures over
appropriated amounts. DOD stated that, in general, it did not concur
with an imposition of new centralized control over the services‘ budget
execution. Furthermore, DOD stated its concern that the services need
to be able to respond to changes in external factors during the 2 years
between budget submission and program execution. However, as our report
points out, DOD has repeatedly exceeded its appropriations during the
last 5 fiscal years. For example, during fiscal years 1997-2001, the
services spent over $240 million above their appropriations. Better
program oversight and management by DOD would have required the
services to justify exceeding their appropriations during this 5-year
period. We do not believe that more accountability for budget execution
will diminish the services‘ ability to respond to changing operational
needs.
DOD partially concurred with our recommendation that the Office of the
Secretary of Defense conduct annual reviews of the Selective
Reenlistment Bonus Program. DOD cited the annual reviews conducted by
DOD‘s Comptroller as an example of routine program reviews. However, as
we have previously noted, these reviews are limited to the services‘
budget submissions and justification. And, only a small sample of
occupations are included in the budget submission. DOD also stated that
part of the budget process includes reviews by the Office of Management
and Budget. However, Office of Management and Budget officials told us
that their reviews are limited and do not constitute a detailed
assessment of the services‘ programs. DOD‘s response also stated that
its annual defense report will provide a listing of DOD-critical skills
and other pertinent information. However, this listing will not
represent a detailed programmatic review. DOD‘s Annual Defense Report
is an overarching representation of all DOD programs and does not
permit the level of detailed information required to fully assess the
Selective Reenlistment Bonus Program.
We continue to believe that our recommendations have merit and have
made no adjustments to them. During the course of our review, the House
Appropriations Committee directed the Secretary of Defense to report on
several aspects of the Selective Reenlistment Bonus Program and to
provide the Committee with that report by March 31, 2003. It also
directed us to review and assess that report and report back to the
Committee by June 1, 2003.
DOD‘s comments appear in their entirety in appendix IV. DOD also
provided technical comments, which we incorporated into the report as
appropriate.
We are sending copies of this report to interested congressional
committees; the Secretaries of Defense and the Army, Navy, and Air
Force; the Commandant of the Marine Corps; and the Director, Office of
Management and Budget. We will send copies to other interested parties
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-5559 if you or your staff have any
questions regarding this report. Key contributors to this report were
Donald Snyder, Kurt Burgeson, James Driggins, Marjorie Pratt, Brian
James, Jane Hunt, Earl Williams, and Maria-Alaina Rambus.
Derek B. Stewart
Director, Defense Capabilities
and Management:
Signed By Derek B. Stewart:
[End of section]
Appendix I: Scope and Methodology:
To determine the extent to which the services followed their Selective
Reenlistment Bonus Program‘s management criteria, we reviewed their
criteria and other documentation of overall program development and
execution. We examined the retention rates as reported by the services
as well as prepared program expenditure and growth trends. We then
reviewed the services‘ reported contributing program growth factors:
(1) budgetary changes, (2) the effects of downsizing initiated in the
early 1990s, and (3) changes in the recruiting and retention climate
during the 1990s. We also attended one of the Department of Defense
(DOD) Comptroller‘s quarterly services‘ recruiting and retention
briefings in addition to reviewing materials from previous briefings.
To determine how the selective reenlistment bonus program has been used
to address retention problems in specialties of most concern to the
services, we reviewed the critical specialties they identified in the
selective reenlistment bonus sections of their budget justification
books.[Footnote 6] Since the Air Force did not report its top critical
retention occupations in its justification books, we examined the
critical occupations listed by the Army, Navy, and Marine Corps for
fiscal year 1998 (fiscal year 1999 for the Army) to 2003. More
specifically, we identified specialties that appeared on the services‘
lists for 3 or more years. We then reviewed the history of the bonus
multiples that the services applied to these occupations to determine
how they were used to address the retention problems in those
occupations.
To identify trends in the programs budget, we compared the services‘
budget requests with their actual budget expenditures for fiscal years
1997-2002. As part of this trend analysis, we reviewed both the initial
and anniversary payments made during each of the fiscal years and
projected them into the future. We also reviewed congressional actions
that took place during this time period. We also conducted trend
analyses of the number of reenlistees receiving bonuses, changes in the
occupations eligible for bonuses, and changes in the average bonus
amounts. We were unable to measure the impact of pay increases on the
average bonus amounts during this time frame because the multiples used
to calculate the bonuses varied from year to year.
To assess whether DOD provided adequate program guidance and oversight,
we reviewed legislation and DOD directives and instructions governing
the program. In addition, we reviewed these materials and evaluated the
extent to which the program was meeting its intended purpose as defined
by Congress and DOD. We obtained and reviewed the guidance established
by the services for implementing their programs. We reviewed the
criteria contained within the services‘ guidance and assessed their
adherence to it.
We interviewed DOD and Selective Reenlistment Bonus Program officials
and reviewed their program oversight and guidance policies and
procedures. These interviews were conducted with officials in the
Office of the Under Secretary of Defense (Comptroller); Assistant
Secretary of Defense (Force Management Policy); Deputy Chief of Staff
for Personnel--Army (Professional Development); Deputy Chief of Staff,
Personnel--Air Force (Skills Management); Deputy Chief of Naval
Operations (Manpower and Personnel); Deputy Chief of Staff for Manpower
and Reserve Affairs--Marine Corps; and Deputy Chief of Staff for
Programs and Resources--Marine Corps. We also met with officials from
the Office of Management and Budget. We also reviewed our own published
report, and data from the Office of the Secretary of Defense, the
Congressional Research Service, and RAND. We also obtained data on
bonus levels from DOD and the services, the numbers of personnel
reenlisting overall and within the program, critical skills, and
retention and recruitment data. We reviewed, but did not verify, the
accuracy of the data provided by DOD and the services.
[End of section]
Appendix II: How the Selective Reenlistment Bonuses Are Paid:
The services use DOD‘s Selective Reenlistment Bonus Program to help
meet their staffing requirements. The selective reenlistment bonus is
designed to offer an attractive reenlistment or extension incentive to
improve staffing in critical military specialties.[Footnote 7] The
active duty individuals in the critical military specialties who
reenlist or extend their enlistments are to serve for the full period
of the reenlistment or extension contract.
Under the Selective Reenlistment Bonus Program, there are two methods
of bonus payments: (1) initial and/or (2) anniversary. The initial
payment is the first installment paid to the individual when the
individual reenlists or begins serving the extension. The initial
payment is either 50 percent of the total bonus or 100 percent of the
total bonus, called the ’lump-sum payment.“ Any remaining bonus is paid
in equal annual installments on the anniversary date for the remainder
of the reenlistment contract period.
The Office of the Secretary of Defense has established three
eligibility zones for the payment of selective reenlistment bonuses.
These zones are defined in terms of years of active-duty service. Zone
A includes reenlistments falling from 17 months to 6 years of active
duty; zone B, from 6 to 10 years; and zone C, from 10 to 14 years. The
Selected Reenlistment Bonus multiples are calculated for each of these
three zones. (See table 3.) Service members may receive only one
selective reenlistment bonus within any one zone and must reenlist or
extend their reenlistments for at least 3 years if they accept a bonus.
Table 3: Eligibility for Zones A, B, and C under the Selective
Reenlistment Bonus Program:
Calculated zone: Zone A; Eligibility characteristics: * Individual must
have at least 17 months of continuous active duty service (other than
active duty for training as a reservist) but not more than 6 years of
active duty on the date of reenlistment.; * Individual must not have
previously received a zone A selective reenlistment bonus..
Calculated zone: Zone B; Eligibility characteristics: * Individual must
have completed at least 6 but not more than 10 years of active service
(including active duty for training as a reservist) on the date of
reenlistment.; * Individual must not have previously received a zone B
selective reenlistment bonus..
Calculated zone: Zone C; Eligibility characteristics: * Individual must
have completed at least 10 but not more than 14 years of active service
(including active duty for training as a reservist) on the date of
reenlistment.; * Individual must not have previously received a zone C
selective reenlistment bonus..
Source: DOD Financial Management Regulation Volume 7A, Chapter 9,
Section 090201.
[End of table]
[End of section]
Appendix III: Growth of the Services‘ Selective Reenlistment Bonus
Programs and Initial Payments:
This appendix describes the growth of the program in constant dollars
and growth in the services‘ initial payments during fiscal years 1997-
2002.
Program Growth:
The services‘ budgets for the selective reenlistment bonus program have
grown during fiscal years 1990-2001. During the military drawdown in
the early to mid-1990‘s, the cost of the program declined. During the
period from fiscal year 1996-2002, the budgets of the services‘
programs grew from $243 million to an estimated $790 million in
constant (inflation adjusted) dollars. Figure 2 displays the cost of
the retention bonus program in constant 2002 dollars during fiscal
years 1990-2002.
Figure 2: Cost of the Selective Reenlistment Bonus Program in Constant
2002 Dollars, Fiscal Years 1990-2002:
[See PDF for Image]
[End of Fidure}
Growth in Initial Payments by the Services:
Army:
The Army‘s Selective Reenlistment Bonus Program budget for initial
payments grew from $30 million to $72 million during fiscal years 1997-
2001. (See fig. 3.) During fiscal years 1997-2001, the Army exceeded
its appropriated budget by approximately $49 million after taking into
account an additional $64 million that Congress added to the Army‘s
initial payments budget over this period.
Figure 3: Army‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
[See PDF for Image]
[End of Figure]
Navy:
The Navy, which recently has had the largest Selective Reenlistment
Bonus Program, also experienced budget growth in its initial payments
from $78 million to $234 million during fiscal years 1997-2001. (See
fig. 4.) During fiscal years 1997-2001, the Navy exceeded its
appropriated budget by more than $121 million after taking into account
an additional $44 million that Congress added to the Navy‘s initial
payments budget over this period.
Figure 4: Navy‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
[See PDF for Image]
[End of Figure]
Marine Corps:
The Marine Corps, from fiscal year 1997 through 2002, had the smallest
Selective Reenlistment Bonus Program. The Marine Corps‘ program is also
unique because in fiscal year 2001, it began making lump-sum bonus
payments. This resulted in a significant increase in the program‘s cost
for that year. During fiscal years 1997-2000, the Marine Corps‘ program
budget for initial payments grew annually from $8 million to $25
million. However, the transition to lump-sum payments in fiscal year
2001 caused the Marine Corps‘ budget for new payments to exceed $46
million. (See fig. 5.):
Figure 5: Marine Corps‘ Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
[See PDF for Image]
[End of Figure]
Air Force:
During fiscal years 1997-2001, the Air Force‘s reenlistment bonus
budget for initial payments grew from $13 million to $123 million, an
846-percent increase. (See fig. 6.) During fiscal years 1997-2001, the
Air Force exceeded its appropriated budget by more than $70 million
after taking into account an additional $57 million that Congress added
to the Air Force‘s initial payments budget over this period.
Figure 6: Air Force‘s Selective Reenlistment Bonus Program‘s Initial
Payments, Budget Request, and Reported Expenditures, Fiscal Years 1997-
2002:
[See PDF for Image]
[End of Figure]
[End of section]
Appendix IV: Comments from the Department of Defense:
OFFICE OF THE UNDER SECRETARY OF DEFENSE 4000 DEFENSE PENTAGON
WASHINGTON, D.C. 20301-4000:
NOV 19 2002:
PERSONNEL AND READINESS:
Mr. Derek B. Stewart:
Director, Defense Management Issues United States General Accounting
Office Washington, DC 20548:
Dear Mr. Stewart:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GAO-03-149, ’MILITARY PERSONNEL: Management and Oversight of
Selective Reenlistment Bonus Program Needs Improvement,“ dated October
17, 2002 (GAO Code 350194). We appreciate the opportunity to comment.
The Department does not agree with the report‘s conclusion that DoD
cannot be sure that Selective Reenlistment Bonus (SRB) programs are
being implemented as intended. Program controls, through the Planning,
Programming, and Budgeting System, and Department policy, strike a
reasonable balance between oversight and decentralized execution. While
higher retention in the critical skills does impact overall retention,
the Department does not use the SRB program to simply meet overall end
strength goals. Rather, the SRB program is used to shape the force,
with each participating skill evaluated on its merits, independent of
aggregate retention outcomes. The Services continue to use the SRB
program for critical skills where it is essential to maintain the
health, balance, and readiness of the force. In addition, the Services
monitor and adjust their SRB offers in response to the retention
behavior of individual occupational specialties.
The GAO notes that DoD‘s budget for SRB has nearly tripled since 1998.
SRBs awarded relate directly to required versus actual reenlistments in
the critical skills. This is not unexpected given that SRB expenditures
dropped steadily in the 1990s, by a little over 40 percent from 1990 to
1998. Subsequently, as the military emerged from the drawdown, the
Services began experiencing substantial retention shortfalls in
critical skills exacerbated by a strong economy that drove unemployment
rates to their lowest levels in more than 30 years. Naturally, the SRB
expenditures started to increase in response.
Total growth in this program over the past few years is a consequence,
in part, of DoD‘s downsizing programs in the mid-1990s. Accession
levels were reduced to meet end strength targets. As a result, certain
skill inventories within the Services became unbalanced, leaving
significant experience shortfalls in critical mid-grade enlisted ranks
--a condition that increased retention challenges and placed extra
pressure on retention tools to achieve retention rates above the
historical averages (to yield the same retention number from a smaller
cohort).
The enclosure addresses each of the four recommendations identified by
the GAO. In general, the Department does not concur with the imposition
of new and more centralized program execution validations, which would
serve to inhibit a Service‘s speed and flexibility in responsively
attacking emergent readiness challenges. However, the GAO review was
constructive, and the Department will integrate appropriate adjustments
to the management of this important program.
The Department appreciates the opportunity to comment on the draft
report.
Sincerely,
Charles S. Abell:
Principal Deputy:
Signed by Charles S. Abell:
Enclosure: As stated:
GAO-03-149/GAO CODE 350194:
’MILITARY PERSONNEL: MANAGEMENT AND OVERSIGHT OF SELECTIVE REENLISTMENT
BONUS PROGRAM NEEDS IMPROVEMENT“:
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
require the Services to apply all the criteria they have established
for selecting specialties under their Selective Reenlistment Bonus
Programs. 1n the case of the Army, criteria should be established for
selecting critical specialties. (Page 21/Draft Report):
DoD RESPONSE: Partially concur. The established criteria permit the
Services to selectively target their resources to meet service-unique
retention needs in a judicious and cost-effective manner. The Services
define the critical skills for their mission accomplishment and these
may change over time. Predicting reenlistment behavior of varying
specialties is a complex task. Thus, the criteria were written to
provide flexibility for management of critical skills to meet
shortfalls in their inventory. The Department‘s criteria are sound, and
the Services‘ processes are balanced.
Even though the Army presently does not have a SRB regulation at this
time, criteria it uses in its SRB program are sound. In administering
the SRB program, standards are in place to review historical and
projected strengths, current and historical retention data, replacement
costs, levels of fill by skill level and readiness. These tools are
used to determine if a specialty needs a bonus to ensure the required
fill and experience balance across the force profile. Senior level Army
officials review and approve awarding of bonuses.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
require the Services to manage their programs to stay within their
appropriations or, if circumstances require, provide the Office of the
Secretary of Defense with adequate justification for increased
expenditures over appropriated amounts. (Page 21/Draft Report):
DoD RESPONSE: Partially concur. The Department subscribes to the
proposition that program execution should be consistent with the
appropriations allocated to that purpose. The extent to which a Service
can execute to their fiscal year budget for the SRB program depends on
the success of retention programs achieving needed reenlistments during
the year of execution. We are concerned with the loss of flexibility
imposed by this recommendation. Budget submission timelines require
reenlistment forecasts two years prior to execution. Intervening
changes in the economy and labor market drive changes to actual
reenlistment rates, which can vary significantly from forecasted rates.
To maintain a competitive edge over the external labor market, the
Services need the flexibility to adjust SRB execution to meet
operational needs.
Management of the program during the year of execution requires
periodic reviews of the skills and real time opening and closing of SRB
offerings based on the Service projection to meet annual retention
goals. The decision to open or close skills for SRB have a profound
effect on the funds available and year of execution reprogramming is
not uncommon. Meeting the authorized end strength and maintaining a
high personnel readiness posture requires careful:
management and decisive actions - we are confident that the system and
processes are in place to meet these objectives.
With respect to expenditures above amounts budgeted for a given fiscal
year, the Services are already required to submit for pre-approval any
reprogramming above $10 million between budget authority lines. We do
not see that any value would be added by adding a new administrative
requirement for the Services to seek OSD approval for moving amounts
below that amount. We are committed to managing these programs in such
a way as to provide the greatest return to the Department and remain
within our funding obligations.
RECOMMENDATION 3: The GAO recommended that the Secretary of Defense
require that the Under Secretary of Defense for Personnel and Readiness
issue an instruction that provides the Services with guidance for
administering and selecting specialties for inclusion in their
programs. (Page 21/Draft Report):
DoD RESPONSE: Concur. The Department has drafted and is staffing a new
DoD Instruction 1304.22 that will govern procedures for administration
of the Selective Reenlistment Bonus program, which will facilitate the
more efficient administration of the Service bonus programs. While
there is no current instruction, the bonus policy and program
guidelines are already in effect either by virtue of being in the last
issuance or having been implemented via policy and procedural
Directive-type memoranda.
RECOMMENDATION 4: The GAO recommended that the Secretary of Defense
require that the Under Secretary of Defense for Personnel and Readiness
conduct annual reviews of the Selective Reenlistment Bonus Program as
required by DoD‘s directive. (Page 21/Draft Report):
DoD RESPONSE: Partially concur. The future DoD directive will not
require a formal annual review since the SRB program execution is
routinely reviewed each year within the context of the Planning,
Programming, and Budgeting System, with adjustments applied up or down,
as judged appropriate by OSD. Moreover, the Department already requires
the Services to submit for approval any reprogramming action above $10
million between budget authority lines needed to fund proposed
adjustments to the bonus program. The Services‘ currently manage their
SRB programs carefully and offer bonuses sparingly. At least annually,
the Services examine the health of individual occupational specialties
to shape a sustainable force, which will meet readiness needs today and
in the future. Each Service prepares a plan for use of bonuses and the
plans are carefully reviewed in the course of the Department‘s
Planning, Programming, and Budgeting process, Congressional testimony,
and again by the Office of Management and Budget and the Congress.
Additionally, as part of the Secretary of Defense‘s Annual Defense
Report, the Department will provide a listing of DoD critical skills,
which includes an update on manning shortages or skill level imbalances
in the specialty, retention objectives for the specialty, any bonuses
paid to this skill, training investment and replacement costs for those
qualified in the specialty, and other pertinent information. This
process is also being reviewed within the DoD Human Resource Strategy.
Finally, SRB program execution outcomes will be added as a review item
during ’Status of Force“ reviews, presently conducted each quarter.
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FOOTNOTES
[1] The authority for the reenlistment bonus is codified at 37 U.S.C.
308.
[2] DOD Directive Number 1304.21.
[3] DOD‘s 2002 Quadrennial Review of Military Compensation stated that
use of the program had increased substantially since 1997 as the
services began to report recruiting and retention problems. The report
states the increased use of selective reenlistment bonuses as a key
factor in the services‘ meeting aggregate retention objectives over the
past 3 years.
[4] See U.S. General Accounting Office, Retention Bonuses: More
Direction and Oversight Needed, GAO/NSIAD-96-42 (Washington, D.C.: Nov.
24, 1995).
[5] Cryptologic Technicians perform a variety of duties at numerous
overseas and stateside shore commands; aboard surface ships; and, to a
limited degree, aboard aircraft and submarines. Duties include
performing the collection and analysis of state-of-the-art
communication signals using sophisticated high-powered computers,
specialized computer-assisted communications equipment, video display
terminals, and electronic/magnetic recorders.
[6] Budget justification books are submitted to Congress each year in
support of the services‘ budget requests.
[7] A military specialty is an element of the enlisted classification
structure that identifies an individual position or a group of closely
related positions on the basis of the duties involved. The term used to
designate a military specialty differs according to the military
service concerned, such as ’military occupational specialty,“ used by
the Army and Marine Corps; ’Air Force specialty,“ used by the Air
Force; and ’Navy enlisted classification,“ used by the Navy.
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analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
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engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ’Today‘s Reports,“ on its
Web site daily. The list contains links to the full-text document
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