Military Personnel: DOD Needs More Effective Controls to Better Assess the Progress of the Selective Reenlistment Bonus Program
Published: 2003-11-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) uses the Selective Reenlistment Bonus (SRB) program to reenlist military personnel in critical specialties. In fiscal years 1997-2003, the program budget rose 138 percent, from $308 million to $734 million. In fiscal year 2003, the House Appropriations Committee directed the Secretary of Defense to reassess program efficiency and report on five concerns: (1) how effective the program is in correcting retention shortfalls in critical occupations, (2) how replacement guidance will ensure targeting critical specialties that impact readiness, (3) how DOD will match program execution with appropriated funding, (4) how well the services' processes for administering the program work, and (5) advantages and disadvantages of paying bonuses in lump sum payments. The committee also directed GAO to review and assess DOD's report.
section_title: What GAO Found
paragraphs: Despite congressional concerns about the SRB program, DOD's May 2003 report stated that the program is managed carefully, bonuses are offered sparingly, and the services need flexibility in administering the program. However, DOD's responses did not thoroughly address four of the five SRB program concerns contained in the mandate. As a result, Congress does not have sufficient information to determine if the program is being managed effectively or efficiently. DOD has not issued replacement program guidance and did not allow us to review the guidance that has been drafted. DOD's report focused primarily on criteria for designating occupations as critical, but the report did not address an important change--the potential elimination of the requirement for conducting annual program reviews. In response to our 2002 report, DOD stated that this requirement would be eliminated from future program guidance. DOD recently told us that the new guidance will require periodic reviews, but neither the frequency nor the details of how these reviews would be conducted was explained. DOD conducted a limited evaluation to address the congressional concern about how well the services are administering their programs. The response consisted largely of program descriptions provided by the services. Among other things, DOD did not use a consistent set of procedures and metrics to evaluate each of the services' programs. Consequently, it is difficult to identify best practices, or to gain other insights into ways in which the effectiveness and efficiency of the services' programs could be improved. DOD thoroughly addressed the congressional concern pertaining to the advantages and disadvantages of paying SRBs as lump sums.

section_title: Letter
paragraphs: To meet its total active-duty force requirements, the Department of  Defense (DOD) must reenlist about 150,000 personnel each year. The  Selective Reenlistment Bonus (SRB) program is intended to help the  services increase reenlistments in occupational specialties, such as  linguists and information technology specialists, that the Secretary of  Defense deems to be critical. Concerned about missing their overall  retention goals in the late 1990s, all the services expanded their use of  SRBs to help retain more enlisted personnel. As a result, the cost of the  program more than doubled—from $308 million in fiscal 1997 to  $791 million in fiscal 2002. During the last few years, Congress also  approved DOD requests for basic pay increases above the rate of inflation  to address the services’ retention concerns. Despite military pay increases  and improved overall retention, funding for the services’ SRB budget is  expected to rise to over $800 million in fiscal year 2005. Moreover, about  one-third of all current reenlistments receive SRBs.
To facilitate closer monitoring of the SRB program, congressional defense  committees requested our 1995 and 2002 reviews of the program. The  House Appropriations Committee also mandated our current review of  DOD's recently issued report on the program. In our 2002 report, we  identified several management and oversight concerns. For example, some  services were not using all the criteria they had established for selecting  occupational specialties to receive bonuses; the numbers of both  reenlistments and SRB-eligible specialties had grown substantially since  1998; and critical program guidance canceled in 1996 had not been  reissued. Among other things, we recommended that DOD conduct annual  reviews of the services’ SRB programs as required by its directive. In  concurring with our recommendation, DOD noted that a future DOD  directive would not require formal annual reviews of the program. Rather,  these reviews would be accomplished through other means that we  concluded were very limited in scope. In our 1996 report, we also  raised concerns about SRB program management and oversight. Our  recommendations included that DOD (1) provide more explicit guidance  and criteria for determining SRB skills and (2) monitor the services’  adherence to this guidance. DOD did not concur with either of these  recommendations.
In a House Report accompanying the Department of Defense fiscal year  2003 appropriation bill, you expressed concern that DOD guidance and  oversight of the SRB program was limited and that “a reassessment of the  program was warranted to ensure it is being managed efficiently.” The  Committee directed the Secretary of Defense to report back to the  committee on five concerns and directed us to review and assess the DOD  report. Those five concerns were (1) effectiveness of the SRB program in  correcting retention shortfalls in critical occupations, (2) replacement  program guidance and how that guidance will ensure that the program  targets only critical specialties that impact readiness, (3) steps DOD  will take to match program execution with appropriated funding,  (4) evaluation of the process the services use to administer the program,  and (5) advantages and disadvantages of paying bonuses as a single lump  sum payment. DOD issued its report in May 2003. In introductory  remarks, DOD’s report stated that the services manage their SRB  programs carefully, offer bonuses sparingly, have management standards  and practices to conduct a review of each skill receiving a bonus, and do  an excellent job tailoring their SRB programs to changing demands for  specific skills. Also, the need for flexibility in administering the program  was a theme present throughout DOD’s report.
In August 2003, we briefed your staff on our preliminary observations  of DOD’s report. We provide our final assessment in this review. Our  objective was to determine the extent to which DOD’s report thoroughly  addressed the five SRB program management concerns raised in the  congressional mandate.
To conduct our work, we examined DOD’s mandated report on its SRB  program, along with supporting documentation from the services and the  Office of the Secretary of Defense (OSD). We also referred to our 2002  report and DOD’s comments on that report. We conducted our review and  assessment from June through September 2003 in accordance with  generally accepted government auditing standards. Additional information  on our scope and methodology is presented in appendix I.
subsections: section_title: Background
paragraphs: Over the past 7 years, DOD has increasingly used the SRB program to  address retention shortfalls. The program’s budget has grown from  $308 million in fiscal year 1997 to an estimated $734 million in fiscal year  2003—a 138 percent increase after the effect of inflation was held constant  (see fig. 1). The budget is estimated to grow to $803 million in fiscal year  2005, with most of the projected growth resulting from increases in the  Air Force SRB program budget. Our 2002 report noted that in fiscal year  2001 the Air Force extended reenlistment bonuses to 80 percent of  its specialties.
In recent years, Congress has appropriated less money than the  services have requested for the SRB program. Based on our work, in  fiscal 2003 Congress appropriated $32 million less than DOD requested.  Congressional committees proposed further SRB budget reductions  during their reviews of DOD’s fiscal year 2004 budget request. The House  Appropriations Committee proposed a $44.6-million reduction; the Senate  Appropriations Committee, a $22-million reduction; and the Senate Armed  Services Committee, a $46-million reduction. The Senate Armed Services  Committee additionally noted concerns about proposed SRB program  budget increases at a time when overall retention rates are robust and the  benefits of military service are increasing overall. DOD appealed these  proposed reductions, noting that “the effects of an improving economy  and the waning emotional patriotic high of the decisive victory in  Operation Iraqi Freedom will combine to increase pressures on both  the recruiting and retention programs.” For fiscal year 2004, Congress  appropriated $697 million for the SRB program, which was a reduction of  $38.6 million from the amount DOD requested.
Despite increased use of the SRB program, DOD has cited continued  retention problems in specialized occupations such as air traffic  controller, linguist, and information technology specialist. A more  favorable picture is present with regard to overall retention. All of the  services reported that they met overall retention goals for fiscal year 2002  and, with the exception of the Air Force missing its retention goal for  second term airmen, expect to meet overall retention goals in fiscal year  2003. Further bolstering these retention expectations are recent survey  results showing improvements in servicemembers’ attitudes toward  remaining in the military. For example, the 2002 DOD-wide status of forces  survey found that the career intent of military personnel had improved  between 1999 and 2002, rising from 50 to 58 percent. The survey results  showed that retention attitudes were particularly better for junior enlisted  (up 11 percent) and junior officers (up 13 percent). In addition, the 2002  Air Force-wide quality of life survey found that 66 percent of enlisted  personnel reported they would make the Air Force a career, which is an  increase from 58 percent, reported in 1997. According to DOD officials,  the effects of more recent events such as extended deployments and other  higher operations tempo issues could change servicemembers’ attitudes  toward remaining in the military.
Congressionally approved reforms in basic pay implemented during the  last 3 years were intended in part to address retention problems,  particularly with mid-grade enlisted personnel. In the 2002 Quadrennial  Review of Military Compensation, DOD attributed the increased use of  SRBs in the late 1990s to a growing pay discrepancy between civilians  and the mid-career enlisted force. For that period, the review noted an  increased use of bonuses for personnel with 10 to 14 years of service. DOD  noted that while bonuses are a very important compensation tool, their  use is intended for specific purposes and for relatively short periods  of time. According to that review, bonuses are appropriate for use within  particular skill categories, not as a tool for resolving military and  civilian pay differentials across an entire segment of the force. The  report noted that widespread pay differentials should be remedied  through pay table restructuring. Pay table restructuring began in fiscal  year 2001, and additional military pay adjustments have been approved  in subsequent budgets.
section_title: DOD’s Report Did Not Thoroughly Address Congressional Concerns
paragraphs: DOD’s May 2003 report did not thoroughly address four of the five  congressional concerns about effective and efficient management of  the SRB program. First, the report indirectly addressed SRB program  effectiveness and efficiency by discussing bonuses as a general military  retention tool instead of the effectiveness and efficiency of the program in  targeting bonuses to improve retention in selected critical occupations.  Second, DOD did not permit us to review the draft guidance, but—based  on DOD’s comments on our 2002 SRB report, excerpts of draft criteria  contained in DOD’s mandated report, and our discussions with DOD  officials—the replacement guidance could expand the SRB program by  giving the services more flexibility in designating occupations as critical  and either eliminate or weaken the requirement for annual SRB program  reviews. Third, OSD did not outline steps to match program execution to  appropriated funding as the mandate required; instead, OSD reiterated the  need for program-execution flexibility. Fourth, OSD’s evaluation of the  services’ administration of their SRBs program was limited, relied largely  on service-provided descriptions, and did not use consistent procedures  and metrics. Finally, as required by the fifth concern in the mandate, DOD  identified the most salient advantages and disadvantages resulting from  paying SRBs as lump sums.
subsections: section_title: DOD Report Indirectly Addressed Program Effectiveness and Efficiency in Correcting Retention Shortfalls
paragraphs: DOD’s report did not directly discuss how effectively and efficiently each  service is currently using the SRB program to address retention problems  in critical occupations. Although the mandate noted, “a reassessment of  the program is warranted to ensure it is being managed efficiently,” DOD’s  response to concern one did not provide sufficient detail to document the  effective and efficient use of the program in awarding SRBs. In response to  one of the other four congressional concerns, DOD stated that the “intent  of retention bonuses is to influence personnel inventories in specific  situations in which less costly methods have proven inadequate or  impractical.” The report did not, however, document what methods had  been used previously or the cost-effectiveness of those methods in  achieving desired retention levels.
Also absent from the report was a discussion of how key factors influence  the current use of SRBs. Examples of key factors include the effects of  changes in the basic pay, overall retention rates, and civilian  unemployment. For example:    Despite increasing basic pay to address the discrepancy between military  and civilian pay noted in the 2002 Quadrennial Review of Military  Compensation, the budgets for the SRB program are projected to grow to  $803 million in fiscal year 2005. In comments received on our preliminary  observations briefing, DOD officials noted that our use of constant 2004  dollars in our budget trend analysis did not fully account for the effects of  the basic pay changes that exceeded the inflation level and thus increased  the size of individual bonuses. At the same time, future SRB program  budgets do not show decreases that might be expected as these pay table  changes address overall military-civilian pay discrepancies and problems  identified within various pay grades.
The report did not address the extent to which recent higher levels of  overall retention offer opportunities for reducing the number of  occupations eligible for SRBs or the bonus amounts awarded for  reenlistment. DOD officials have noted that all of the services met or  exceeded their aggregate retention goals in fiscal year 2002 and that strong  overall retention is expected to continue. However, they cited retention  shortfalls in some occupational specialties as areas of concern. Although a  generally positive aggregate retention climate might present DOD with  opportunities to curtail use of its SRB program, the report did not discuss  under what conditions reductions in the program might or might not be  appropriate at this time.
Despite noting a relationship between civilian unemployment rates  and military retention, DOD’s report did not indicate whether civilian  unemployment—which is at a 9-year high—might result in the need for  fewer SRBs being offered and possibly at lower bonus levels. One study  cited in DOD’s report noted that there is a relationship between higher  unemployment rates and improved overall military retention. In part of its  answer to concern three, DOD noted that changes in the economy and  labor market drive changes in actual reenlistment rates. Just as periods of  relatively lower civilian unemployment might suggest the need for greater  use of the SRB program, periods of relatively higher unemployment might  conversely suggest less need for SRBs. Despite civilian unemployment  being at its highest rate in several years, the SRB program budget is  projected to increase in fiscal year 2005.
Instead of directly addressing program effectiveness and efficiency,  the 2003 report discussed the general benefits of using bonuses to  retain military personnel. DOD’s report cited numerous studies that  demonstrated or postulated this effect. However, findings from some  studies may not be readily generalized to the way that the SRB program  is currently managed or to the economic conditions that currently exist.  More specifically, some studies used outdated retention data obtained in  the mid-1970s or were performed in a very different retention environment  (e.g., the increase in force size during the 1980s and the large draw-down  of military forces in the 1990s). Even given our concerns about some of the  findings, we believe DOD presented sufficient support for its conclusion  that bonuses can be effective in promoting retention. A largely  unaddressed, but more pertinent issue is how effectively and efficiently  DOD applied this tool to improve retention in critical occupations under  recent and current economic conditions.
section_title: Replacement Program Guidance Not Issued but Proposed Changes Could Weaken Controls for Targeting SRBs
paragraphs: DOD did not permit us to review the draft guidance that will replace the  current DOD directive and the DOD instruction canceled in 1996. Our  findings for this concern are based on DOD’s comments on our 2002 SRB  report, excerpts of draft criteria contained in DOD’s mandated report, and  our discussions with DOD officials. Changes to the guidance could lower  the threshold required for designating occupations as critical and may  eliminate or weaken the requirement for formal annual reviews of the  SRB program.
DOD’s planned changes to the replacement guidance could provide the  services with greater flexibility for designating a specialty as critical but  could weaken the controls for targeting the specialties receiving SRBs  by lowering the threshold required for making such a designation. The  canceled 1996 instruction required the services to consider five criteria  before designating a specialty critical and making it eligible for SRBs,  but DOD’s 2003 report stated that the revised program instruction would  require occupations to meet a lower threshold—meeting “at least” one of  five criteria. For the period since 1996 when the instruction was canceled,  our 2002 report found that, in some cases, the services had already been  using only one of the five criteria to designate occupations for inclusion in  the program. This allowed the services to define broadly what constituted  a critical occupation and included more occupations than would have  likely qualified if all five criteria had been considered.
DOD’s planned changes could also eliminate or weaken the requirement  for formal annual reviews of the SRB program and thereby weaken the  ability of Congress and DOD to monitor the program and ensure that it  targets only critical specialties. To implement the SRB program, DOD  Directive 1304.21 assigns specific responsibilities for administering the  program to the OSD and to the service Secretaries. According to this  directive, the Assistant Secretary of Defense for Force Management  Policy, under the Under Secretary of Defense for Personnel and  Readiness, 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 OSD is to make the revisions needed to attain specific  policy objectives. Our 2002 report found that DOD had not conducted any  of the required annual program reviews since 1991. In its response to our  2002 SRB report, DOD stated that it plans to eliminate those requirements  from the replacement guidance. More recently, a DOD official stated that  the new guidance will require periodic reviews, but neither the frequency  nor the details of how these reviews would be conducted was explained.  In its report to Congress, DOD maintained that much of the SRB program  oversight takes place during ongoing internal service program budget  reviews. In contrast, we concluded in our 2002 report that those program  budget reviews were limited in scope and did not provide the detailed  evaluation needed to ensure the program was being implemented as  intended. A more in-depth discussion of the current limited oversight is  provided when we discuss DOD’s response to the fourth concern.
In contrast to the previously mentioned changes, DOD’s report noted  some steps that we believe could strengthen controls on the SRB program.  According to the report, the new SRB program instruction will (1) require  the services to establish parameters to define “critical shortages” and  (2) base those requirements on factors such as the potential impact of a  shortage on mission accomplishment. In addition, DOD has recently  established a working group that has been tasked with developing a  “common understanding and definition of critical skills.” Previously, we  found that DOD had not clearly defined the criteria the services were to  use in designating critical occupations since the SRB program instruction  was canceled in 1996.
section_title: DOD Report Outlined No New Steps to Match Program Execution with Appropriations
paragraphs: Contrary to the mandate, DOD’s 2003 report did not outline steps that  it will take to match program execution with appropriated funding.  Instead, DOD stated that the services need execution flexibility and have  operated consistent with the law and within the overall Military Personnel  appropriation. Our trend analysis in current year dollars showed that the  services spent a combined total of $259 million more than Congress  appropriated for the SRB program in fiscal years 1999-2002. DOD’s use  of this flexibility has resulted in the services overspending their SRB  budgets by as much as $111 million in a single year—fiscal year 2001.  More recently, two of the services stayed within their appropriated  budgets. In fiscal year 2002, the Air Force and Marine Corps spent,  respectively, $26 million and $4 million less than their fiscal year 2002 SRB  appropriation. However, the Army and Navy exceeded their appropriated  SRB budgets by $38 million and $21 million, respectively.
DOD noted that the services can reallocate funds within the Military  Personnel appropriation without seeking congressional authority. In the  report, DOD did not agree with the congressional concern that program  expenditures needed to match funding levels appropriated specifically for  the SRB program. Rather, DOD maintained that monies were available  from other parts of the Military Personnel appropriation if a service  needed additional SRB funding in a fiscal year. DOD’s response noted that  budget submission timelines require reenlistment forecasts up to 2 years  prior to execution and that intervening changes in the economy and labor  market can add uncertainty and drive changes in actual reenlistment rates.  Using the services in-year, or current estimates—created during the year  of program execution—we found that the services had exceeded their  fiscal year 1999-2002 estimates for the number of expected SRB  reenlistments by a combined total of 32,466 personnel. Furthermore, our  current trend analysis on their budget justifications showed that for the  Army and Navy, reallocation or reprogramming of funds had become a  reoccurring pattern of activity. In our 2002 report, we concluded that  better OSD program oversight and management would have required the  services to justify their need to exceed appropriations during fiscal years  1997-2001.
section_title: Evaluation of Services’ Processes for Administering the Program Was Limited
paragraphs: DOD’s limited evaluation of the services’ SRB programs relied primarily  on program descriptions provided by the services. The report presented  different issues for each service and used inconsistent procedures and  metrics to reach conclusions about each service’s program administration  effectiveness and efficiency. Absent was a discussion of key performance  indicators, the means used to verify and validate the measured values, and  other characteristics such as those GAO identified in its report assessing  agency annual performance plans. The absence of a consistent, explicit  methodology made it difficult to determine (1) best practices that might  be applied from one service to another and (2) other insights that could  result in each service more effectively and efficiently administering its  SRB program.
Although OSD assembled a multi-service panel to discuss the evaluation,  DOD’s response consisted largely of program descriptions that the  services supplied. Each service made statements about the effectiveness  of its program but provided insufficient documentation to support those  statements. OSD conducted its last comprehensive review of the SRB  program in 1991. As noted earlier in our assessment of DOD’s response  to the second concern, DOD stated that it intends to eliminate the  requirement to perform detailed annual program reviews when its  replacement program directive is issued.
In introductory comments to the 2003 report, DOD stated that the SRB  program is evaluated annually within the context of three Planning,  Programming, and Budgeting System activities. In our 2002 report, we  found that those reviews, conducted by the DOD Comptroller and the  Office of Management and Budget (OMB), and the testimony provided to  Congress were limited.
When the services prepare budget submissions for the SRB program, they  discuss the small sample of occupations included in their justification  books. As we noted in our 2002 report, the DOD Comptroller stated that  the budget submissions are not detailed programmatic evaluations.
DOD’s 2003 report also cited OMB reviews as part of an evaluation of the  programs. During the preparation of our 2002 report, OMB officials told us  that their reviews were limited and did not constitute a detailed  assessment of the services’ programs.
DOD’s 2003 report stated that the services’ out-year budgets were carefully  reviewed during congressional testimony. It is our view that congressional  testimony does not represent a detailed programmatic review of a program  this complex. For example, in March 11, 2003, DOD’s testimony before the  Military Personnel Subcommittee of the Senate Armed Services  Committee included very limited statements about the SRB program.
DOD’s report listed some positive steps that the services have proposed to  administer the SRB program more effectively and efficiently. For example,  the Navy and Army are validating and improving the models used to  manage their SRB programs, and the Air Force has created a new bonus  review board to keep its leaders apprised of how the SRB program is  functioning. At the time of our review, the services were just starting to  implement these steps to improve their programs, and there was no data  to determine how effective and efficient these efforts are.
section_title: DOD Report Identified Advantages and Disadvantages of Using a Lump Sum Payment Option
paragraphs: DOD identified the most salient advantages and disadvantages resulting  from implementing a lump sum payment method for paying retention  bonuses. We generally concur with DOD’s observations about the  positive and negative aspects of using lump sum bonuses. DOD’s report  cited a 1985 GAO study that found lump sum payments had three main  advantages: more cost-effective, better visibility to Congress, and more  adaptable to budget cuts than paying bonuses incrementally. The 2003  DOD report cited another important consideration in awarding bonuses  in lump sum payments. Because enlisted personnel prefer “up-front”  payments and are willing to receive less money initially than more money  offered in the future, we believe that the federal government could reenlist  more personnel for the same amount of money if bonuses were paid in a  lump sum.
DOD cited several disadvantages to using a lump sum payment option. For  example, there are significant up-front costs associated with paying both  lump sum SRB payments in the implementation year and completing the  anniversary payments for SRBs awarded previously. The first year of  change would require the largest budget increase, and each subsequent  transition year would become less costly. The implementation of a lump  sum SRB program could become cost neutral over the long term if  bonuses paid in a lump sum eliminated the need for equal amounts of  anniversary payments in succeeding years. It could even save money if  sufficient reenlistees were attracted with less money because up-front  compensation—even if less—is more attractive than compensation  promised in the future.
DOD’s report addressed other potential disadvantages of using a lump sum  payment method. These include the possibility that a recipient will fail to  stay in the military for the full reenlistment period after receiving a bonus  and the problem associated with recouping all or part of bonus amounts  from personnel who do not complete their obligated term of service.  Despite these disadvantages, our 1985 report stated our support for the  use of lump sum retention bonuses. The Marine Corps began using the  lump sum payment option for its SRB program in fiscal year 2001 and is  the only service currently using this payment method. In February 2004,  the Marine Corps expects to have preliminary results from an evaluation  of its use of lump sum payments.
Although not required by the mandate to do so, DOD and the services  could have made the response to concern five more informative for  Congress by identifying alternative strategies for implementing the lump  sum option and estimating the costs of each strategy for each service. For  example, one strategy might be to phase in the lump sum payment option.  Phasing in lump sum payments could provide DOD with increased  program administration flexibility and decreased budgetary problems  caused by switching from installment payments in a single year.
section_title: Conclusions
paragraphs: Overall, our analysis of DOD’s May 2003 congressionally mandated report  on the SRB program showed that DOD’s report did not provide sufficient  information to enable Congress to determine whether the program is being  managed effectively and efficiently. With one exception, DOD’s report did  not thoroughly address congressional concerns about the effective and  efficient management of the SRB program. Of DOD’s responses to the five  congressional concerns, three were incomplete or nonresponsive—those  regarding program effectiveness and efficiency in correcting retention  shortfalls in critical occupations, DOD actions to match program  execution with appropriations, and DOD’s evaluation of the services’  program administration. A fourth response—regarding replacement  program guidance—did not provide information essential for us to make  an independent determination as to the response’s adequacy. DOD directly  and fully addressed one of mandated concerns—the advantages and  disadvantages of lump sum bonus payments. Although the SRB program is  expected to grow to over $800 million in fiscal year 2005, the report did  not address factors that may have reduced the services’ retention  concerns and could reduce SRB program cost. Underlying many of these  shortcomings is a lack of empirically based information caused by DOD’s  limited reviews of the SRB and inconsistent use of evaluation procedures  and metrics. DOD’s possible elimination of the requirement for a detailed  annual review and continued reliance on service-specific procedures  and metrics could further weaken Congress’s ability to monitor the  SRB program.
section_title: Recommendation for Executive Action
paragraphs: To assist Congress in its efforts to monitor the management of the SRB  program and to ensure that DOD is effectively and efficiently targeting  retention bonuses to critical occupations, we recommend that the  Secretary of Defense direct the Office of the Under Secretary of  Defense for Personnel and Readiness to (1) retain the requirement for  an annual review of the SRB program and (2) develop a consistent set  of methodologically sound procedures and metrics for reviewing the  effectiveness and efficiency of all aspects of each service’s SRB  program administration.
section_title: Agency Comments
paragraphs: In written comments on a draft of this report, DOD concurred with  our recommendations. DOD further stated that, with regard to our  recommendation to develop review procedures and metrics, it would  (1) conduct research to develop meaningful metrics for reviewing the  effectiveness and efficiency of all aspects of each service’s administration  of the SRB program and (2) implement those metrics so that they are  consistent with DOD’s Human Resource Strategy Plan. DOD’s comments  are reprinted in their entirety in appendix II.
We are sending copies of this report to the Secretary of Defense. We will  also make copies available to appropriate congressional committees and  to other interested parties on request. In addition, the report will be  available at no charge at the GAO Web site at http://www.gao.gov.
If you or your staff have questions about this report, please call me  at (202) 512-5559. Key staff members contributing to this report were  Jack E. Edwards, Kurt A. Burgeson, Nancy L. Benco, and M. Jane Hunt.
section_title: Appendix I: Scope and Methodology
paragraphs: We reviewed the Department of Defense’s (DOD) May 2003  congressionally mandated report and documents used in the preparation  of that report. That information was supplemented with prior Selective  Reenlistment Bonus (SRB) program guidance, budget request  documentation, and other information gathered during our 2002 review of  the SRB program. To assess the adequacy and accuracy of the information  contained in DOD’s report, we obtained and reviewed documentation used  by the Office of the Secretary of Defense (OSD) to support its responses.  For example, we reviewed the eight studies cited in DOD’s response to  concern one in the mandate. In addition, we reviewed information  provided by each of the services, as well as past GAO and DOD reports on  the SRB program. We compared findings from these past reports to DOD’s  mandated responses to assess the validity of what was presented. We  updated the program budget analysis from our 2002 review using budget  data contained in DOD’s Military Personnel budget justification books  prepared for Congress. We sought to review updated SRB program  guidance, but DOD indicated that these pre-decisional documents would  not be released until the final versions had been approved.
We met with DOD officials to update information obtained during our 2002  review of the SRB program. Interviews were primarily conducted with  officials in the Office of the Under Secretary of Defense for Personnel and  Readiness because these officials were the primary authors of DOD’s  report. We also met with personnel responsible for administering the  services’ SRB programs. We obtained updated retention data contained in  prepared statements used by DOD during congressional hearings. We also  reviewed the results of DOD’s 2002 status of forces survey and the Air  Force’s 2002 quality of life survey.
We conducted our review from June through September 2003 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Department of Defense