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

GAO-03-149
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.

Services' Selective Reenlistment Bonus Program Budgets, Fiscal Years 1997-2002

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.

MILITARY PERSONNEL

Management and Oversight of Selective

Reenlistment Bonus Program Needs

Improvement

www.gao.gov/cgi-bin/getrpt?GAO-03-149.

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.

Highlights of GAO-03-149, a report to the

Chairman, Subcommittee on Defense,

Committee on Appropriations, House of

Representatives

November 2002

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.

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.

DOD Comments

DOD concurred or partially

concurred with our

recommendations.
Page i GAO-03-149 Reenlistment Bonus Program

Letter 1

Results in Brief 1

Background 4

Not Using All Criteria Expanded the Number of Specialties and

Reenlistees 9

DOD Has Not Provided Adequate Guidance and Oversight 14

Conclusions 17

Recommendations for Executive Action 18

Agency Comments and Our Evaluation 18

Appendix I Scope and Methodology 22

Appendix II How the Selective Reenlistment Bonuses Are Paid 24

Appendix III Growth of the Services’ Selective Reenlistment Bonus

Programs and Initial Payments 26

Program Growth 26

Growth in Initial Payments by the Services 27

Appendix IV Comments from the Department of Defense 31

Tables

Table 1: Selective Reenlistment Bonus Program Characteristics by

Service, Fiscal Year 2001 8

Table 2: Selective Reenlistment Bonus Program Characteristics by

Service, Fiscal Years 1997 and 2001 11

Table 3: Eligibility for Zones A, B, and C under the Selective

Reenlistment Bonus Program 25

Figures

Figure 1: Services’ Selective Reenlistment Bonus Program Budgets,

Fiscal Years 1997-2002 6

Figure 2: Cost of the Selective Reenlistment Bonus Program in

Constant 2002 Dollars, Fiscal Years 1990-2002 26

Contents
Page ii GAO-03-149 Reenlistment Bonus Program

Figure 3: Army’s Selective Reenlistment Bonus Program’s Initial

Payments, Budget Request, and Reported Expenditures,

Fiscal Years 1997-2002 27

Figure 4: Navy’s Selective Reenlistment Bonus Program’s Initial

Payments, Budget Request, and Reported Expenditures,

Fiscal Years 1997-2002 28

Figure 5: Marine Corps’ Selective Reenlistment Bonus Program’s

Initial Payments, Budget Request, and Reported

Expenditures, Fiscal Years 1997-2002 29

Figure 6: Air Force’s Selective Reenlistment Bonus Program’s

Initial Payments, Budget Request, and Reported

Expenditures, Fiscal Years 1997-2002 30

Abbreviations

DOD Department of Defense

GAO General Accounting Office
Page 1 GAO-03-149 Reenlistment Bonus Program

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.)

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

United States General Accounting Office

Washington, DC 20548

Results in Brief
Page 2 GAO-03-149 Reenlistment Bonus Program

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
Page 3 GAO-03-149 Reenlistment Bonus Program

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.
Page 4 GAO-03-149 Reenlistment Bonus Program

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.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 1985,2

 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.

 1

 The authority for the reenlistment bonus is codified at 37 U.S.C. 308.

2

 DOD Directive Number 1304.21.

Background
Page 5 GAO-03-149 Reenlistment Bonus Program

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.
Page 6 GAO-03-149 Reenlistment Bonus Program

Figure 1: Services’ Selective Reenlistment Bonus Program Budgets, Fiscal Years

1997-2002
Page 7 GAO-03-149 Reenlistment Bonus Program

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.

How the Selective

Reenlistment Bonus

Program Works
Page 8 GAO-03-149 Reenlistment Bonus 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 Army Navy Marine Corps Air Force

Maximum bonus $40,000a $60,000 $35,000 $60,000

Maximum multiple 5.0 8.0 5.0 6.0

Minimum obligation 3 years 3 years 4 years 4 years

Maximum obligation 6 years 6 years 6 years 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.

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.
Page 9 GAO-03-149 Reenlistment Bonus Program

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 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.

Not Using All Criteria

Expanded the

Number of Specialties

and Reenlistees

Some Services Do Not

Consistently Use All of the

Criteria They Have

Established for Selecting

Specialties That Receive

Bonuses
Page 10 GAO-03-149 Reenlistment Bonus 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.

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.)1

 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

 1

 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.

Growth in the Number of

Specialties and Reenlistees
Page 11 GAO-03-149 Reenlistment Bonus Program

$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

Service

Program

characteristic Army Navy Marine Corps Air Force Total

Fiscal year 1997 2001 1997 2001 1997 2001 1997 2001 1997 2001

Number of bonus

specialties 72 124 204 219 133 163 68 158 477 644

Number of

specialtiesa 267 274 1,146b 1,153b 424 397 197 197 2,034 2,021

Percentage of

specialties 27 45 18 19 31 41 35 80 23 33

Number of bonus

recipients 6,726 17,125 11,580 21,356 1,414 3,123 3,612 17,336 23,332 58,940

Number of

reenlistees 78,478 63,059 40,947 42,270 13,486 13,830 43,836 40,865 176,747 160,024

Percentage receiving

bonus 9 27 28 51 10 23 8 42 13 37

Average initial

paymentc $4,400 $4,218 $6,764 $10,957 $5,442 $15,065d $3,598 $7,089 $5,512 $8,079

Average initial

payment in constant

2001 dollars $4,721 $4,218 $7,258 $10,957 $5,840 $15,065 $3,861 $7,089 $5,915 $8,079

Source: The services’ budget justification documents and other information provided by the services.

a

The number of service specialties varied over this time period for some services as some

occupations were merged or eliminated.

b

Navy specialties included 107 ratings plus 1,039 skill classifications in 1997 and 92 ratings plus

1,061 skill classifications in 2001.

c

Current-year dollars.

d

The Marine Corps implemented a lump-sum (100 percent) payment option in fiscal year 2001. Under

the anniversary payment method, the initial payment would have been $7,532.50.

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

Services’ Programs Not

Managed to Stay Within

Appropriated Budgets
Page 12 GAO-03-149 Reenlistment Bonus Program

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.

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

Management of Selective

Reenlistment Bonus

Program
Page 13 GAO-03-149 Reenlistment Bonus Program

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.

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.

Factors Influencing Growth
Page 14 GAO-03-149 Reenlistment Bonus Program

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 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.

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 Has Not

Provided Adequate

Guidance and

Oversight

DOD Has Not Replaced

Essential Program

Guidance
Page 15 GAO-03-149 Reenlistment Bonus Program

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.

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

DOD Oversight Has Been

Limited

DOD Has Conducted No

Comprehensive Program

Review Since 1991
Page 16 GAO-03-149 Reenlistment Bonus Program

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.2

 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.

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

 2

 See U.S. General Accounting Office, Retention Bonuses: More Direction and Oversight

Needed, GAO/NSIAD-96-42 (Washington, D.C.: Nov. 24, 1995).

Comptroller Conducts Limited

Review of Program Budget

Requests
Page 17 GAO-03-149 Reenlistment Bonus Program

(Collection)3 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).

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

 3

 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.

Conclusions
Page 18 GAO-03-149 Reenlistment Bonus Program

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.

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.

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

Recommendations for

Executive Action

Agency Comments

and Our Evaluation
Page 19 GAO-03-149 Reenlistment Bonus Program

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
Page 20 GAO-03-149 Reenlistment Bonus Program

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.
Page 21 GAO-03-149 Reenlistment Bonus Program

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
Appendix I: Scope and Methodology

Page 22 GAO-03-149 Reenlistment Bonus Program

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.1

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.

 1

 Budget justification books are submitted to Congress each year in support of the services’

budget requests.

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 23 GAO-03-149 Reenlistment Bonus Program

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.
Appendix II: How the Selective Reenlistment

Bonuses Are Paid

Page 24 GAO-03-149 Reenlistment Bonus Program

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.1

 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.

 1

 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.

Appendix II: How the Selective Reenlistment

Bonuses Are Paid
Appendix II: How the Selective Reenlistment

Bonuses Are Paid

Page 25 GAO-03-149 Reenlistment Bonus Program

Table 3: Eligibility for Zones A, B, and C under the Selective Reenlistment Bonus

Program

Calculated zone Eligibility characteristics

Zone A • 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.

Zone B • 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.

Zone C • 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.
Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Page 26 GAO-03-149 Reenlistment Bonus Program

This appendix describes the growth of the program in constant dollars and

growth in the services’ initial payments during fiscal years 1997-2002.

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

Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Program Growth
Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Page 27 GAO-03-149 Reenlistment Bonus Program

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

Growth in Initial

Payments by the

Services

Army
Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Page 28 GAO-03-149 Reenlistment Bonus Program

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

Navy
Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Page 29 GAO-03-149 Reenlistment Bonus Program

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

Marine Corps
Appendix III: Growth of the Services’

Selective Reenlistment Bonus Programs and

Initial Payments

Page 30 GAO-03-149 Reenlistment Bonus Program

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

Air Force
Appendix IV: Comments from the Department

of Defense

Page 31 GAO-03-149 Reenlistment Bonus Program

Appendix IV: Comments from the

Department of Defense
Appendix IV: Comments from the Department

of Defense

Page 32 GAO-03-149 Reenlistment Bonus Program
Appendix IV: Comments from the Department

of Defense

Page 33 GAO-03-149 Reenlistment Bonus Program
Appendix IV: Comments from the Department

of Defense

Page 34 GAO-03-149 Reenlistment Bonus Program (350194)
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