United States General Accounting Office

GAO Report to Congressional Committees

November 1995 RETENTION

BONUSES

More Direction and

Oversight Needed

GAO/NSIAD-96-42

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-259744.2 

November 24, 1995

The Honorable Robert K. Dornan

Chairman

The Honorable Owen B. Pickett

Ranking Minority Member

Subcommittee on Military Personnel

Committee on National Security

House of Representatives

This review was conducted to determine whether the Department of

Defense (DOD) is effectively managing the Selective Reenlistment Bonus

(SRB) program. As agreed with your office, this report is addressed to you

because of the Subcommittee’s ongoing interest in special pays and

allowances. The specific objectives were to (1) ascertain whether

reenlistment bonuses were being paid to enlisted servicemembers in skill

categories that were not experiencing significant personnel shortages or

skills that were also receiving separation incentives and (2) assess the

oversight of the program by the Office of the Secretary of Defense (OSD).

The SRB program is one means DOD is using to achieve its force manning

objectives as the services downsize. We have previously reported that the

services have been successful in maintaining high aggregate personnel

levels throughout the drawdown.1

 This report looks below aggregate

personnel levels and focuses on personnel levels within occupational

specialties.

Background The SRB program is authorized by 37 U.S.C. 308 to help maintain an

adequate level of experienced and qualified enlisted personnel. The

program authorizes bonuses of up to $45,000 to personnel in critical skills

who have between 21 months and 14 years of active-duty service and who

reenlist or extend their reenlistments for at least 3 years. The intent of the

program, according to DOD, is to focus reenlistment incentives on critical

skills that are in short supply and have high training costs.

Results in Brief We found that the services are awarding some SRBs to skills where a high

percentage of the required positions are already filled. In fiscal year 1994,

1

Military Personnel: High Aggregate Personnel Levels Maintained Throughout Drawdown

(GAO/NSIAD-95-97, June 2, 1995).

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B-259744.2 

for example, 43 percent of the new SRB contracts2 awarded went to

servicemembers in skills where 90 percent or more of the required

positions were filled (the level used by the readiness reporting system to

indicate a unit’s capability to perform all mission requirements) and in

which many higher skill level servicemembers were paid incentives to

leave the service. The value of these SRB contracts was about $64 million.

Service officials defended their management of the retention and

separation incentive programs, stating that each is targeted at different

segments of the force, that retention and separation incentives went to

personnel in different grades and year groups (cohorts of personnel with

the same number of years of military experience), and that payment of

separation incentives did not mean they were satisfied with manning

levels. We believe that if a skill is experiencing shortages that warrant

paying retention incentives, it is not prudent to pay incentives to others in

that same skill to leave the service.

OSD is not providing adequate direction and oversight of the SRB program.

Its guidance to the services for determining which skill categories should

receive SRBs is too general in nature. As a result, each service uses a

different procedure for identifying which skill categories are to receive

SRBs. Also, OSD’s oversight of the SRB program is lacking. While OSD

guidance requires detailed annual reviews of the skill categories that the

services plan to include in their programs, these reviews are not being

conducted. OSD performed only one such review—in fiscal year

1991—during which the need for 34 percent of the proposed skill

categories was questioned. However, OSD did not require the services to

respond to the report’s findings, did not take any action on the findings,

and has not conducted any subsequent reviews.

Evolution of Current

Program

The current SRB program can be traced to 1965, when the services began to

experience increasing problems in first-term retention and career manning

in a number of technical, high training cost skills. In addressing the

problem, DOD recommended the creation of a flexible reenlistment bonus

program that could be tailored to fit particular skill-retention requirements

and that could be changed as those requirements changed. As a result,

Congress established the Variable Reenlistment Bonus program in 1965. In

2

Generally, half the amount payable for an SRB reenlistment is paid at the beginning of the

reenlistment period, with the remaining half paid in equal annual installments over the remaining term

of the reenlistment. In this report, the term “new contracts” is used to indicate SRB reenlistment

contracts initiated within the given fiscal year. When discussing the cost of new contracts, we refer to

the total value of the contracts (initial 50-percent payment and outyear installments).

Page 2 GAO/NSIAD-96-42 Retention Bonuses
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the ensuing years, this became the SRB program and was modified and

extended to address concerns about retention and manning problems.

The Secretary of Defense has established three eligibility zones for the

payment of SRBs. Zones are defined in terms of years of active-duty service.

Zone A includes reenlistments falling between 21 months and 6 years of

active duty; zone B, between 6 and 10 years; and zone C, between 10 and

14 years. The service secretaries designate which skills and which zones

within those skills are eligible to receive SRBs. Servicemembers may

receive only one SRB within any one zone.

The total cost of new SRB contracts awarded has declined over the past 

5 years (see fig. 1). According to service officials and budget justification

documents submitted to Congress, the main reason for the declines was

the force downsizing occurring during this period, which reduced the need

for military personnel. According to DOD, SRB contracts declined by nearly

60 percent during the last 5 years while the force declined about

30 percent.

Figure 1: Cost of New SRB Contracts,

Fiscal Year 1990-94 Dollars in millions

0

50

100

150

200

250

300

350

400

450

500

550

600

1990 1991 1992 1993 1994

Fiscal year

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In fiscal years 1993 and 1994, personnel in approximately 20 percent of

DOD’s enlisted skills were awarded SRBs. More than 30 percent of the

enlisted personnel were in those skills. However, not all of these

servicemembers would be eligible for SRBs in a given year because they

would not be up for reenlistment in that year or would not be in a zone

that was eligible for SRBs. According to DOD, 1.1 percent of all active-duty

personnel received a new SRB contract in 1994, down from 2.4 percent in

1990.

The cost of the SRB program varies considerably by service. Table 1 shows

the number of people who received new SRB payments in fiscal year 1994,

the total cost, and the average cost per recipient of those new SRB

contracts. Nearly 60 percent of the total cost for new SRB contracts was

incurred by the Navy. Also, the average new SRB contract cost per recipient

was higher in the Marine Corps and the Navy than in the other two

services.

Table 1: Number and Cost of New SRB

Contracts, Fiscal Year 1994

Bonus recipients

Contract cost

(in millions)

Average contract

cost (in thousands)

Air Force 2,408 $20.1 $8.3

Army 5,641 46.3 8.2

Marine Corps 918 13.6 14.8

Navy 9,170 113.5 12.4

Total 18,137 $193.5 $10.7

SRBs Awarded to

Personnel in High-Fill

Skill Categories

Many SRBs have gone to personnel who are not in skill categories where

extensive shortages exist. To determine whether SRBs are awarded only

where needed to overcome shortages, we applied two measures to each

skill category that received SRBs in either fiscal year 1994 or 1993:

(1) overall fill rate at the beginning of the fiscal year (defined as the

percent of required positions that were filled) and (2) whether individuals

in that same skill category had been given financial incentives to leave the

service.

A Substantial Proportion of

SRB Payments Went to

Personnel in Skills With

High Fill Rates

We used the proportion of required positions filled as an indicator of

whether a skill was experiencing a significant personnel shortage. The

Status of Resources and Training System (SORTS), which is the system used

by the services for reporting unit readiness, has established criteria that

units with 90 percent of their assigned personnel on hand are considered

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B-259744.2 

prepared to conduct all required wartime missions. Therefore, we used the

90-percent fill rate as an indicator of high fill. Also, according to

representatives of the Air Force and the Marine Corps, a fill rate of

90 percent or less in a skill category flags that category for consideration

for an SRB. Neither the Army nor the Navy had a specific fill rate threshold

for SRB consideration.

Using service-provided fill rates and SRB information, we found that 

81 percent of people awarded SRBs across DOD in fiscal year 1994 and 

78 percent in fiscal year 1993 were in skill categories that were filled at

least at the 90-percent level. The cost of these contracts was about 

$155 million in fiscal year 1994 and about $165 million in fiscal year 1993.

Figures 2 and 3 show the percentage of new SRB contracts given to

personnel in high-fill skill categories in fiscal years 1994 and 1993. The

figures show the results of analyses at three levels of fill (90, 95, and 

100 percent) by service. As these figures show, a substantial proportion of

the SRB payments went to personnel in skill categories that were not

experiencing large shortfalls. While the percentages drop as the fill rate

increases, each service paid a substantial proportion of its new SRBs to

personnel in skill categories that were already filled 100 percent or higher.

Across DOD, 25 percent of fiscal year 1994 and 30 percent of fiscal year

1993 SRB recipients were in skill categories with fill rates of 100 percent or

higher. The cost of these contracts was about $58 million in fiscal year

1994 and about $71 million in fiscal year 1993.

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Figure 2: Fiscal Year 1994 Contracts to

Personnel in High-Fill Skill Categories Percent of new bonus contracts

0

10

20

30

40

50

60

70

80

90

100

Air Force Army Navy Marine Corps DOD

86

73

27

78

43

14

85

51

32

42

30

23

81

50

25

Skills filled to 90 percent or higher

Skills filled to 95 percent or higher

Skills filled to 100 percent or higher

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B-259744.2 

Figure 3: Fiscal Year 1993 Contracts to

Personnel in High-Fill Skill Categories Percent of new bonus contracts

0

10

20

30

40

50

60

70

80

90

100

Air Force Army Navy Marine Corps DOD

79

72

48

66

37

24

85

79

30

66

40

30

78

63

30

Skills filled to 90 percent or higher

Skills filled to 95 percent or higher

Skills filled to 100 percent or higher

SRBs and Separation

Incentives Were Given to

the Same Skill Categories

In recent years, retention needs have declined with reduced force levels.

To facilitate military downsizing, Congress authorized two types of special

separation pay to personnel who voluntarily leave the military by

September 30, 1999, but are not eligible to retire: (1) the Voluntary

Separation Incentive (VSI), which is a variable annuity payment, and (2) the

Special Separation Benefit (SSB), which is a one-time, lump-sum payment.3

We were initially told by OSD and service representatives that retention and

exit bonuses should not be going to personnel in the same skill categories.

However, in fiscal years 1994 and 1993, 48 percent of the personnel

awarded new SRB contracts were in skill categories in which other

personnel in the same skill categories received financial separation

incentives. In fiscal year 1994, nearly 8,800 military personnel who

received new SRB contracts (at a cost of about $73 million) were in the

same skill categories as about 2,100 of the separation-incentive recipients

(who received about $82 million to leave the military). In fiscal year 1993,

nearly 10,300 military personnel who received new SRB contracts (at a cost

of about $75 million) were in the same skill categories as about 2,100 of

3

10 U.S.C. 1174a and 1175.

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B-259744.2 

the separation incentive recipients (who received about $82 million to

leave). Thus, either the services are paying SRBs to people with skills that

are not in short supply or they are paying exit incentives to people with

skills that are in short supply.

Table 2 shows the number of new fiscal year 1994 SRB recipients in each

service who were in skill categories where separation incentives were

paid, the percentage of total SRB recipients that this group comprised, and

the cost of those new SRB contracts. Eighty-four percent of the Army’s new

SRB recipients were in skill categories in which separation incentives were

also paid.

Table 2: Selective Reenlistment Bonus

and Separation Incentive Match (Fiscal

Year 1994) SRBs in skills that received exit bonuses

Dollars in millions

Total SRB

recipients Number Percent Cost

Air Force 2,408 670 28% $5.6

Army 5,641 4,720 84 38.7

Marine Corps 918 636 69 9.1

Navy 9,170 2,753 30 20.0

Total 18,137 8,779 48% $73.4

About Half of SRBs

Awarded in High Fill Skill

Categories That Also

Received Separation

Incentives

A more stringent test of whether SRBs were going to personnel who were

not in shortage categories involves the determination of how many SRB

recipients were in skill categories that had high fill rates and where other

personnel in the same skill categories received incentive payments to

leave the military. In fiscal years 1994 and 1993, 43 percent of the new SRB

contracts awarded (at a cost of about $64 million in fiscal year 1994 and

$65 million in fiscal year 1993) were in skill categories that met both of the

measures we applied—fill rates of 90 percent or higher and payment of

separation incentives. Furthermore, 9 percent of new SRB contracts

awarded in fiscal year 1994 and 17 percent in fiscal year 1993 were in skill

categories with fill rates of 100 percent or higher and to which exit

incentives were paid. The cost of these contracts was about $14 million for

fiscal year 1994 and about $29 million for fiscal year 1993.

Figures 4 and 5 show the percentage of new SRB contracts by service that

went to personnel in skill categories having high fill rates and where other

personnel in the same skill categories received separation incentives in

fiscal years 1994 and 1993. The number of separation incentives given by

the Air Force in fiscal year 1993 includes those given in fiscal year 1992.

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Air Force officials told us that they ran fiscal years 1992 and 1993 exit

incentive programs as one program and were unable to provide

information on fiscal year 1993 by itself. The reduction of the percentages

from fiscal years 1993 to 1994 in the Air Force and the Marine Corps

results primarily from reductions in the number of separation incentives

given.

Figure 4: Fiscal Year 1994 SRB

Contracts in High-Fill Skill Categories

That Also Received Separation

Bonuses

Percent of new bonus contracts

0

10

20

30

40

50

60

70

80

90

100

Air Force Army Navy Marine Corps DOD

28 28

13

75

42

13

29

12

6

30

20

14

43

24

9

Skills filled at 90 percent or higher

Skills filled at 95 percent or higher

Skills filled at 100 percent or higher

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Figure 5: Fiscal Year 1993 SRB

Contracts in High-Fill Skill Categories

That Also Received Separation

Bonuses

Percent of new bonus contracts

0

10

20

30

40

50

60

70

80

90

100

Air Force Army Navy Marine Corps DOD

76

70

47

59

31

22 22 22

5

61

36

26

43

32

17

Skills filled at 90 percent or higher

Skills filled at 95 percent or higher

Skills filled at 100 percent or higher

Services’ Rationale for

SRBs and Separation

Incentives in Same

Skills

Service officials told us that although they had paid some people to stay

and other people to leave in the same military skills, the retention and

separation incentive programs were directed at different grade and year

groups. We agree. However, we believe that if a skill is critically short and

warrants retention bonuses, separation incentives should not be given to

personnel in those skills. Air Force officials told us that they changed their

policy in fiscal year 1994 to not allow members in SRB skills to separate

using VSI/SSB except in cases of documented extreme hardships because

they did not think it was appropriate to pay some people to stay and

others to leave in the same skill.

Service officials also said that their payment of VSI/SSB incentives to

personnel in an SRB skill did not mean that they were satisfied with the fill

rate in that skill. Rather, they said the separation incentives were given in

an effort to comply with congressional direction to use voluntary means to

achieve force reductions. While Congress encouraged the services to use

voluntary means wherever possible to achieve needed reductions, we

found no indication in the legislative history that Congress intended that

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the services offer voluntary separation incentives to personnel in critically

short skills to avoid involuntarily separating personnel in skills with

excesses.

Service officials also took issue with our use of the 90-percent fill level as

an indication that a skill was not critically short. We agree that some skills

might be considered critically short at anything less than 100-percent fill.

That is why we also provided data on the 95-percent and 100-percent fill

levels. However, the services have not defined which skills require higher

fill rates than the 90-percent criterion used for readiness reporting.

OSD Guidance and

Oversight of the SRB

Program Are Lacking

OSD is not providing adequate direction and oversight of the SRB program.

OSD guidance to the services for determining which skills should receive

SRBs is general and oversight review of the services’ programs is lacking.

OSD guidance for determining those skills to receive SRBs instructs the

services to use a “balanced evaluation” that “should include, but not be

limited to, a full assessment of the following factors.”

• Serious undermanning in three or more adjacent year-groups in the bonus

zones.

• Chronic and persistent shortages in total career manning.

• High replacement cost.

• Skills that are relatively arduous or otherwise unattractive compared to

other military skills or civilian alternatives.

• Skills that are essential to the accomplishment of defense missions.

OSD has not defined many of the terms in its guidance, such as “serious

undermanning” and “chronic and persistent shortages,” nor has it

established how much weight should be given to each of the selection

factors. As a result, each service uses a different procedure to identify and

prioritize which skills will receive SRBs. Service officials said that, in

deciding who will receive SRBs, they consider factors similar to the OSD

guidance, such as whether the skill is currently receiving an SRB,

reenlistment trends, fill rates, the skill’s criticality to accomplishing the

defense mission, and the cost, length, and availability of training. They too

have not established criteria for determining how much weight to give

these various factors.

OSD has proposed new guidelines for the SRB program, but these guidelines

do not clarify the selection criteria. They state that the purpose of the SRB

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B-259744.2 

program is “to encourage the reenlistment of sufficient numbers of

qualified enlisted uniformed services personnel in critical military

specialties with high training costs or demonstrated retention shortfalls.”

The use of the connector “or” appears to broaden the purpose of the

program, which is stated in the current guidelines as “intended to attract

more reenlistments in critical military specialties characterized by

retention levels insufficient to sustain the career force at an adequate

level.” While we agree that training costs should be a consideration in

deciding whether to give retention bonuses, we do not believe that high

training cost alone justifies payment of retention incentives if the

personnel are not in specialties experiencing demonstrated retention

shortfalls.

Although OSD guidance specifies that OSD conduct a detailed annual review

of the SRB program, examining each skill category programmed for an SRB,

such annual reviews have not been conducted. A one-time study

conducted by OSD in 1991 of the skill categories that the services were

including in their programs, identified several areas of concern and

questioned the need to provide SRBs to 34 percent of the proposed skill

categories. OSD did not require the services to respond to the report’s

findings, took no action on the findings, and has conducted no further

reviews of the SRB program.

Recommendations We recommend that the Secretary of Defense establish guidance and

controls to ensure that the SRB program provides bonuses only for

reenlistments in skill categories that are in short supply. Specifically, we

recommend that the Secretary (1) provide more explicit guidance

regarding the determination of shortage categories and eligibility for SRBs

and require the services to establish and document more specific criteria

for determining which skills will receive SRBs and (2) monitor the services’

adherence to this guidance. Because of the extent to which exit incentives

have been provided to personnel in skills which also received SRBs, we

recommend that the Secretary ensure that payment of exit and retention

incentives is coordinated so that they are not both provided to personnel

in the same skill categories.

Agency Comments

and Our Evaluation

DOD did not agree with our findings or recommendations, stating that our

methodology and analysis were flawed. DOD’s comments are included in

their entirety in appendix I.

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DOD stated that our analysis was flawed by an assumption that 90 percent

manning is a satisfactory level of fill in all skill categories. DOD stated that

certain skill categories are imminently critical to the mission of each

service and that, in many cases, 100 percent of authorized manning is not

enough to do the job. Consequently, using 90 percent as the delineation of

high fill for critical skills is unacceptable to DOD.

We did not assume that 90-percent fill is necessarily sufficient. Although

90 percent of authorized positions is the fill level used in the official DOD

unit readiness reporting system to indicate a capability to perform all

assigned missions, we agree with DOD that what is considered to be an

adequate fill level can vary by skill. For this reason, we provided data on

the 90-percent, 95-percent, and 100-percent fill levels. Our point, therefore,

was not that 90 percent represents high fill, but that DOD has failed to

adequately define which skills require higher fill rates. That is, when DOD

states that “certain skill categories are imminently critical to the mission

of each service,” we expected to find some definition or criteria that would

identify which skills those were or how they could be determined.

Furthermore, if it is true as DOD asserts that “in many cases . . . 100 percent

of authorized manning is not enough to do the job,” then manpower

requirements need to be reexamined. In addition, if DOD believes that the

90-percent manning figure used in readiness reporting does not represent

a level that enables a unit to perform all required missions, it needs to

revise its criteria so that an accurate picture of readiness can be conveyed

to military decisionmakers.

DOD stated that our methodology was also flawed because we looked at

manning levels across entire skills rather than looking at manning within

SRB years of experience zones. DOD stated that it is essential to continue to

administer the SRB program by zones “since the services have requirements

for minimum levels of manning within each of these zones.” However,

enlisted force managers in each of the services told us that they do not

manage their enlisted force by SRB zones nor do they routinely express

their requirements by zone. Rather, they manage by grade level or years of

service groups that overlap the SRB zones.

We originally attempted to analyze fill rates by SRB zone, but, except for

the Navy, the services could not readily provide us with fill rates by zone.

In analyzing the Navy’s data by zone, we found that about 50 percent of the

skill zones given SRBs in fiscal year 1994 were filled at rates of 90 percent

or higher. In fact, 35 percent were filled at rates of 100 percent or higher.

Consequently, looking at fill rates by zone where the services were able to

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B-259744.2 

provide the data did not change our conclusion that some SRBs were being

paid to people in skills that did not appear to have critical shortages.

We found similar results when we looked at the Air Force. Air Force

officials told us that they do not consider fill rates by zone when making

SRB decisions. They stated that in most cases they provide SRBs to

personnel in zones A and B to ensure sufficient personnel at the

noncommissioned officer (NCO) level. In examining this, however, we

found that most of the skills that were filled at or above the 90-percent

level overall, also had NCO fill rates of at least 90 percent. In fiscal year

1994, 64 percent of SRB skills with fill rates of 90 percent or higher also had

NCO fill rates of 90 percent or higher and 21 percent had fill rates of

100 percent or higher. In fiscal year 1993, 78 percent of SRB skills with fill

rates of 90 percent or higher also had NCO fill rates of 90 percent or higher

and 44 percent had fill rates of 100 percent or higher. Thus, looking at Air

Force NCO fill rates rather than overall fill rates does not change the

conclusion that some SRBs were being paid to people in skills that did not

appear to have critical shortages.

DOD noted that a person with 2 years’ experience cannot be substituted for

a person with 10 to 14 years of experience. We agree. Therefore, when we

found the services paying separation bonuses to personnel with 10 to 

14 years of experience in a skill area, we viewed it as an indication that the

service personnel managers did not consider that skill area to be

experiencing a critical shortfall. If service personnel managers believed

that a skill area was critically undermanned, it would make no sense to

provide incentives to the higher experienced personnel in that skill to

leave the service and thus exacerbate the undermanning.

DOD also noted that it is not cost-efficient for a senior person to perform a

function for which he is overqualified. Again, we agree. However, if there

is really a critical shortage of lower skilled personnel and an excess of

higher skilled personnel in that same occupation, we would expect the

service to backfill with the higher skilled personnel rather than paying

them bonuses to leave.

DOD also took issue with our finding that additional OSD oversight is

required. DOD stated that the services and the Department spend a great

deal of time and effort on the SRB program and it already goes through

several lengthy review processes, including an annual budget justification.

DOD also argues that the 1991 study declared the SRB program to be

well-run and, therefore, no additional OSD oversight is required. The 1991

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study, however, does not really support that conclusion. While making the

general comment that the services’ SRB programs were in compliance with

DOD policy and were well-managed, the study identified 84 skills out of 250

(about 34 percent) that should be considered for further review.4

 We could

find no indication that those 84 skills were reexamined. Also, the study

noted that the OSD policy guidance is very general and that there are

numerous ways it can be interpreted, each interpretation leading to a very

different analytic criteria. The study proposed an automated approach that

would apply a set of objective criteria to each skill, resulting in two groups

of skills—those that were acceptable and those that needed further

consideration. The services would then be asked to comment on any skills

that were identified by the criteria as needing further review.

OSD also stated that it does not want to add more complications to an

already cumbersome system by layering additional restrictions on the

services. DOD also noted that the services need flexibility to be able to

respond to rapidly changing requirements for readiness. We do not see the

exercise of adequate oversight as necessarily decreasing flexibility. The

1991 study stated that the approach it proposed would allow each of the

services to develop, execute, and justify its SRB plans based on its unique

requirements and objectives as long as they fit within the overall policy

guidance.

Rather than use the approach suggested by the 1991 study or develop a

similarly streamlined method of maintaining adequate oversight, OSD has

opted for reducing its oversight of the SRB program. DOD Instruction

1304.22 stated that OSD “shall conduct a detailed annual review of the

enlistment bonus, selective reenlistment bonus, and special duty

assignment pay programs” in conjunction with Program Objectives

Memorandum cycle. It further stated that each military specialty

programmed for a bonus in the next 2 fiscal years shall be examined.

However, OSD has not performed such a review since the 1991 study and it

has drafted new guidance that eliminates the detailed review requirement.

Scope and

Methodology

We examined the legislative history of the SRB program and OSD and

service regulations for the program. We also interviewed OSD and service

representatives to determine their policies on designating SRB skills,

awarding SRBs, and paying of VSI and SSB to servicemembers in SRB skills.

4

The 1991 study also acknowledged that it could only evaluate a portion of the Navy’s SRB program

because the Navy did not have any realistic requirements for skills under the more detailed Navy

Enlisted Classification system.

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We analyzed information provided by the services from a number of

databases to determine the following for fiscal years 1993 and 1994:

• the number and cost of new SRBs awarded by skill,

• fill rates at the beginning of the year for skills receiving SRBs,

• the number and cost of SRBs awarded to skills with high fill rates, and

• the number of VSIs and SSBs given to personnel in skills eligible for SRBs.

We did not perform a reliability assessment of the databases from which

the services provided us data. However, we compared the information

provided us to that contained in service reports and discussed the

information with service officials to ensure it provided a reasonable and

accurate profile of individuals receiving SRBs, the fill rates for SRB skills,

and VSI and SSB recipients. Our review was conducted from June 1994 to

October 1995 in accordance with generally accepted government auditing

standards.

Please contact me at (202) 512-5140 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix II.

Mark E. Gebicke

Director, Military Operations

 and Capabilities Issues

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Contents

Letter 1

Appendix I 

Comments From the

Department of

Defense

20

Appendix II 

Major Contributors to

This Report

28

Tables Table 1: Number and Cost of New SRB Contracts, Fiscal Year

1994

4

Table 2: Selective Reenlistment Bonus and Separation Incentive

Match

8

Figures Figure 1: Cost of New SRB Contracts, Fiscal Year 1990-94 3

Figure 2: Fiscal Year 1994 Contracts to Personnel in High-Fill

Skill Categories

6

Figure 3: Fiscal Year 1993 Contracts to Personnel in High-Fill

Skill Categories

7

Figure 4: Fiscal Year 1994 SRB Contracts in High-Fill Skill

Categories That Also Received Separation Bonuses

9

Figure 5: Fiscal Year 1993 SRB Contracts in High-Fill Skill

Categories That Also Received Separation Bonuses

10

Abbreviations

DOD Department of Defense

GSM Gas Turbine Mechanics

IDC Independent Duty Corpsmen

SRB Selective Reenlistment Bonus

OSD Office of the Secretary of Defense

SORTS Status of Resources and Training System

VSI Voluntary Separation Incentive

SSB Special Separation Benefit

NCO Noncommissioned Officer

Page 18 GAO/NSIAD-96-42 Retention Bonuses
Page 19 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 20 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Page 21 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Now on p. 1.

Now on pp. 2-4.

See comment 1.

Page 22 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Now on pp. 4-7.

Now on pp. 7-8.

Page 23 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Now on pp. 8-10.

Page 24 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Now on pp. 11-12.

Page 25 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

Now on p. 12.

Page 26 GAO/NSIAD-96-42 Retention Bonuses
Appendix I 

Comments From the Department of Defense

The following are GAO’s comments on the Department of Defense’s letter

dated September 28, 1995.

GAO Comments 1. While there may have been other contributors, the drawdown was the

main reason for the reductions cited by service Selective Reenlistment

Bonus (SRB) program managers and stated in service budget justification

documents submitted to Congress. In its budget documents over this

period, the Navy stated that “the number of new payments declined . . .

due to force structure reductions.” In discussing the declining total cost of

new SRB contracts, the Air Force reported in its budget documents to

Congress that “. . . the overall drawdown of the force is a contributing

factor to the lower totals . . .” In addition, SRB program managers in all four

services told us that, generally speaking, the declining total cost of new

SRB contracts resulted from the drawdown.

2. As of September 1995, the Navy had 989 Independent Duty Corpsmen

(IDC) against an authorization of 981 billets, a fill rate of over 100 percent.

The Navy has requirements for an IDC functioning as the sole medical care

provider on 231 of its approximately 372 ships. Even in the unlikely

scenario that all 231 ships were deployed at one time, the Navy should

have no trouble providing the 231 IDCs from its inventory of nearly 

1,000 IDCs.

3. While Navy data shows that the first-term retention rate for Gas Turbine

Mechanics (GSM) declined from 63.3 percent to 37.8 percent during fiscal

year 1994, there is no apparent relationship between the decline and the

SRB program. When the Navy reduced the first-term SRB award payment for

GSMs by nearly two-thirds over the course of fiscal year 1991, the first-term

retention rate actually increased to 57.6 percent from 53.9 percent during

the year. With the SRB award to first-term GSMs maintained at the reduced

payment level, retention rates were 68.2 percent and 63.3 percent at the

end of fiscal years 1992 and 1993, respectively. According to Navy officials,

the drop in reenlistment of first-term GSMs that occurred in fiscal year 1994

was the result of a perception among personnel within that skill area that,

because of reduced ship construction and possible ship

decommissionings, there was no future in the GSM rating. Despite the drop

in the first-term reenlistment rate, as of September 1995, the Navy had an

inventory of 2,974 GSMs against an authorization of 2,871 billets, a fill level

of over 100 percent.

Page 27 GAO/NSIAD-96-42 Retention Bonuses
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Sharon A. Cekala, Associate Director

William E. Beusse, Assistant Director

Norfolk Regional

Office

Janet Keller, Evaluator-in-Charge

Sharon Reid, Evaluator

(703074) Page 28 GAO/NSIAD-96-42 Retention Bonuses
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