Military Personnel: DOD Needs to Update General and Flag Officer Requirements and Improve Availability of Associated Costs
Published: 2014-09-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GFOs are the elite leaders of the U.S. military. In August 2013 Congress raised questions about costs associated with GFOs as the size of the military forces decreases.
GAO was mandated to assess the trends in costs of the active duty GFO population from FY 2001 through FY 2013. This report (1) identifies changes in the population and statutory limits for active duty GFOs relative to other active duty personnel, and the extent to which DOD updated GFO requirements, and (2) assesses what is known about the costs associated with active duty GFOs and their aides and trends in such costs, including trends in GFO compensation costs relative to those of other active duty personnel from FY 2001 through FY 2013. GAO assessed the availability of cost data and analyzed available active duty military personnel population and cost data, including costs for compensation, housing and travel for FY 2001 through FY 2013, using FY 2013 dollars. GAO also met with DOD officials.
section_title: What GAO Found
paragraphs: The general and flag officer (GFO) population (i.e., officers ranked at or above brigadier general or rear admiral) experienced higher rates of growth than the enlisted population since fiscal year (FY) 2001. The Department of Defense (DOD) has not comprehensively updated GFO requirements—the number of GFOs needed to fill positions—since 2003 to reflect changes in the active duty force nor has DOD defined circumstances under which such an update should occur. GFO population growth was generally consistent with the growth in GFO statutory limits. From FY 2001 through FY 2013 growth was not evenly distributed across all military ranks. For example, the GFO and non-GFO officer populations grew from 871 to 943 (8 percent) and from 216,140 to 237,586 (10 percent), respectively, while the enlisted population decreased from 1,155,344 to 1,131,281 (2 percent). DOD officials attributed these differences to the greater flexibility that military planners have to decrease the enlisted population. DOD guidance requires military personnel requirements to be periodically evaluated. DOD conducted a comprehensive update of GFO requirements in 2003 and concluded that the department needed more GFOs than were authorized by Congress. However, DOD officials said that they have not comprehensively updated the requirements since 2003 or advocated for an increase of GFOs because of fiscal constraints. Nevertheless, without periodically conducting a comprehensive update of DOD's GFO requirements, and defining when such an update should occur, it will be difficult for DOD to help ensure that the GFO population is properly sized and structured to meet its assigned missions.
The full cost to DOD for GFOs from FY 2001 through FY 2013 is unknown because complete cost data for GFOs and their aides were not available and trends in available cost data varied. Certain cost data were fully available and complete for FY 2001 through FY 2013, while other cost data were either partially complete or unavailable because of reporting practices, retention policies, inconsistent definitions, and reliability factors. Also, the position of officer aide is not defined in departmental guidance and as a result all military services were not able to consistently track the number of personnel in these positions. Cost data related to GFO compensation and housing were readily available, and trends for these costs varied, with compensation increasing by 38 percent and housing decreasing by 67 percent from FY 2001 through FY 2013. Measured on a per capita basis, compensation costs grew by 18 percent for GFOs, 19 percent for non-GFO officers, and 32 percent for enlisted personnel over the same time frame. GAO assessed GFO commercial travel and per diem and GFO health care costs as partially complete because data were not available for FY 2001 through FY 2013. For the years in which complete data were available, travel and per diem costs increased by 4 percent from FY 2009 through FY 2013 and health care costs grew by 77 percent from FY 2003 through FY 2013. Other cost data, including data for GFO travel on military and government flights, GFO personal security details, and certain enlisted and officer aide costs, were not readily available or GAO determined them to be unreliable because of concerns regarding completeness or accuracy. By defining the officer aide position and GFO and associated aide costs, DOD will be able to better account for the full costs of GFOs and improve its ability to make sound workforce allocation decisions.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD update GFO requirements and define circumstances for doing so, improve information related to GFO aides, and define costs associated with GFOs. DOD partially concurred with the recommendations on updating requirements and improving information on GFO aides, and did not concur with defining costs associated with GFOs, citing among other reasons, a need for flexibility and the adequacy of existing information. GAO continues to believe the recommendations are valid, as discussed in the report.

section_title: Letter
paragraphs: General and flag officers (GFO) are the elite leaders of the U.S. military at  the rank of brigadier general and above (for the Army, the Air Force, and  the Marine Corps) and rear admiral and above (for the Navy), and make  up less than a tenth of a percent of the active duty force. In 2003, the  Department of Defense (DOD) determined that GFO requirements—the  number of GFOs DOD components need to fill positions—were higher  than the number of GFOs that were being authorized by Congress at that  time. However, in March 2011, DOD announced plans to eliminate 102— or 11 percent of—GFO positions as part of the department’s efficiencies  initiatives. Also, recent inspectors general investigations of GFO  misconduct have placed costs associated with GFOs under increased  scrutiny. While recognizing DOD’s efforts to control the numbers of  GFOs on active duty, Congress has raised questions over the costs  associated with sustaining the GFO population as the size of the active  duty force decreases.
In DOD’s 2003 Review of Active Duty and Reserve General and Flag  Officer Authorizations, DOD concluded that at that time, GFO  requirements were higher than the GFO statutory limit of 1,311 positions  by 319 positions. DOD did not explain why it did not seek to increase the statutory limits on  GFO numbers to meet validated requirements. We recommended, among  other things, that DOD periodically update GFO requirements. DOD  concurred with this recommendation at the time, and we discuss the  status of the recommendation later in this report.
Department of Defense, Office of the Under Secretary of Defense (Personnel and  Readiness), Review of Active Duty and Reserve General and Flag Officer Authorizations.
GAO, Military Personnel: DOD Could Make Greater Use of Existing Legislative Authority  to Manage General and Flag Officer Careers, GAO-04-1003 (Washington, D.C.: Sept. 23,  2004).
GFOs. Also, for the fiscal year 2008 National Defense Authorization Act,  DOD proposed eliminating mandatory retirement for years of service or  time in grade for GFOs above the grade of major general or rear admiral.
A Senate report accompanying the Consolidated Appropriations Act of  2014 and a House report accompanying the National Defense  Authorization Act for Fiscal Year 2014 mandated that GAO assess the  trends in costs of the active duty GFO population from fiscal years 2001  to 2013. This report (1) identifies any changes in the population and  statutory limits for active duty GFOs relative to other active duty  personnel, and the extent to which DOD updated GFO requirements, and  (2) assesses what is known about the costs associated with the active  duty GFO population and their aides and any trends in such costs,  including trends in GFO compensation costs relative to those of other  active duty personnel for fiscal years 2001 through 2013.
End strengths are a measure of the number of personnel on military payrolls on the last  day of each fiscal year (September 30).
Secretary of Defense and the military services responsible for GFO  management. We assessed the information we collected against DOD  guidance that requires military and civilian personnel resources be  programmed in accordance with validated requirements that are  periodically reevaluated, and a best practices model for strategic human  capital management.
To assess what is known about the costs associated with the active duty  GFO population and their aides from fiscal years 2001 through 2013,  including any trends in GFO compensation costs relative to those of other  active duty personnel, we identified the relevant offices in the Office of the  Secretary of Defense, the Joint Staff, and the military departments  responsible for managing active duty GFOs and aides, along with related  costs, such as compensation, housing, and travel; met with officials at  these offices to determine the extent to which data were available for this  time frame; obtained and assessed the reliability of available data; and  analyzed available data, when possible. We used DOD’s composite  standard pay rates to calculate the cost of compensation provided to  active duty GFOs and enlisted and officer aides from fiscal years 2001  through 2013. The composite rates are used by DOD when determining  the military personnel appropriations cost for budget and management  studies, but do not include compensation costs located in other budgets,  such as education benefits. We identified criteria in DOD guidance,  federal internal control standards, and federal accounting standards that  specify the need for full and reliable personnel and other cost data for the  purpose of making operating decisions and allocating resources, and  assessed the availability of GFO cost data against those criteria. We defined the GFO-related costs included in our scope as those costs that  were (1) specified in the congressional reports that mandated our work,  (2) consistent with our prior body of work on military compensation, or  (3) determined as GFO-related costs based on discussions with  knowledgeable officials. We categorized each cost element as  “complete,” “partially complete,” or “unavailable” based on the availability,  completeness, and reliability of data provided for fiscal years 2001  through 2013. Cost data that were determined to be “complete” were  readily available for all of the years included in our review. Cost data that  were determined to be “partially complete” were either not available or not  reliable for all years. “Unavailable” cost data were either not readily  available or were determined to be unreliable across all of the years  included in our review. Because of the incomplete nature of the data, cost  elements should not be aggregated to determine the full cost of GFOs.  We assessed the reliability of available data by reviewing documentation,  interviewing and administering questionnaires to cognizant DOD officials,  and independently assessing the completeness of data in order to  determine the process by which data were compiled; identify data  aggregation, storage, reporting, and quality control processes; and  resolve any data anomalies. We did not assess all of the processes used  to create or assemble certain data, such as data sets assembled by DOD  officials from multiple sources. We determined that certain data were not  sufficiently reliable for the purpose of our review based on the presence  of significant errors or incompleteness in some or all of the key data  elements, or because using the data might lead to an incorrect or  unintentional message. Those data were excluded from our analyses. We  believe the cost data that we did include in this report are sufficiently  reliable for the purpose of determining the costs associated with GFOs  and other active duty personnel from fiscal years 2001 through 2013. A  more detailed discussion of our scope and methodology is provided in  appendix I.
We conducted this performance audit from November 2013 to September  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: GFOs are officers in the four ranks of brigadier general and above (for the  Navy, rear admiral and above). GFOs are senior officers with high-level  interagency, intergovernmental, and multinational responsibilities. These  officers plan and implement military operations by integrated military  forces across the domains of land, sea, air, and space. Table 1 displays  the pay grade, title of rank, and insignia worn by GFOs.
GFOs are assigned based on statutory limits and requirements. Congress  establishes statutory limits on the number and distribution across each  rank of GFOs for each of the services and joint staff. For fiscal year 2014,  Title 10 of the U.S. Code mandated service-specific ceilings totaling 652  active duty GFOs for all services. In addition to the service-specific GFO  positions, for fiscal year 2014, Title 10 also specifies 310 GFO positions  to be designated by the Secretary of Defense for joint duty positions.These positions are not included in the service ceilings. DOD determines  GFO requirements—the number of GFOs DOD components need—by  determining the number of positions that should be filled by a GFO.
DOD provides active duty personnel with a compensation package made  up of cash, such as pay and allowances; noncash benefits, such as  health care; and deferred compensation, such as retirement pensions and  health benefits. We have previously reported on the costs of military  compensation and found that there is variability in how compensation is  defined. compensation as other active duty personnel, and may also be provided  with security details, travel on military aircraft, aides, and funds for official  entertainment and representation functions.discussion of the specific cost elements included in this review.
GAO-10-561R. on the personal staffs of GFOs.aides to the personal staffs of GFOs.
Officers may also be detailed as officer  Various organizations across DOD are responsible for tracking GFOs and  associated costs. Within the Office of the Under Secretary of Defense for  Personnel and Readiness, the Officer and Enlisted Personnel  Management office is responsible for GFO matters, including officer  promotion and continuation policies and oversight of the number of GFOs  in relation to statutory limits. Also, within the Office of the Under Secretary  of Defense for Personnel and Readiness, the Military Compensation  office is responsible for formulating, implementing, and administering  DOD policy on military personnel compensation, including active duty and  reserve military pay and allowances. The Director, Cost Assessment and  Program Evaluation, is the principal advisor to the Secretary of Defense  and other senior officials in DOD for independent cost assessment,  program evaluation, and analysis. In collaboration with the Under  Secretary of Defense for Personnel and Readiness and the Under  Secretary of Defense (Comptroller), this office developed a tool to collect  cost elements required to estimate the full cost of military and civilian   In September 2013,  personnel as outlined in DOD Instruction 7041.04. we reported that while this effort has improved DOD’s ability to estimate  the full cost of personnel, there are limitations in certain areas, such as  the lack of specific guidance for estimating certain costs.recommended, among other things, that DOD develop further guidance  on certain cost elements. DOD partially concurred with this  recommendation, but noted that the department will issue clarifying  guidance where necessary or appropriate. We continue to believe that  fully addressing this recommendation would enhance the development of  DOD’s methodology for estimating and comparing the cost of its   We  workforces. DOD Instruction 7041.04 specifies that the Director, Cost  Assessment and Program Evaluation, is responsible for preparing  clarifying guidance as needed for implementing the instruction.
The Secretary of Defense may authorize physical protection and personal  security within the United States for departmental leadership who, based  on their positions, require continuous security and protection. The  Secretary of Defense also may authorize protection for additional  personnel within the United States when necessary, as provided by law.  The Under Secretary of Defense for Policy is the approving authority for  designating individuals who are outside the United States as high-risk  personnel and authorizing protective security details for those individuals.
Each of the services and the Joint Staff has a general or flag officer  matters office responsible for management and tracking of GFOs within  their organization, which identifies, assigns, and tracks aides to GFOs.  The services also track certain GFO costs, including official  representation expenditures and costs associated with providing personal  security details for eligible GFOs. (Comptroller) is responsible for the budget and financial management  policy of DOD, including budget data, justification materials, and  performance measures. The Comptroller’s office also formulates  composite rates that reflect the estimated cost to DOD of compensation  for all ranks of military personnel, including GFOs, and preparing annual  reports on the costs associated with housing units used as quarters for  GFOs (GFO housing). The Defense Travel Management Office and the  Defense Logistics Agency manage the Defense Travel System, which is  designed to capture travel costs for GFOs and other military personnel.  The Defense Health Agency tracks health expenditures for GFOs and  other military personnel, and the Defense Manpower Data Center  maintains GFO and other military personnel population data, including  end strengths.
GFOs, along with members of the Senior Executive Service, have the authority to use  official representation funds to host guests of the United States and DOD, such as civilian  or military dignitaries and officials of foreign governments.
section_title: GFO Population Growth Was Generally Consistent with the Growth in Statutory Limits but Was Higher Than Enlisted Personnel Growth, and DOD Has Not Updated GFO Requirements since 2003
paragraphs: The GFO population has experienced higher rates of growth than the  enlisted population since fiscal year 2001, but DOD has not  comprehensively updated GFO requirements since 2003 to reflect  changes in the active duty force. This growth in the GFO population was  generally consistent with the growth in statutory limits. In addition, growth  varied across all of the active duty military personnel populations (i.e.,  GFOs, non-GFO officers, and enlisted personnel), with the most growth  experienced by non-GFO officers—officers at or below the rank of  colonel/captain. DOD officials stated that there continues to be a need for  more GFOs than are authorized by Congress, but added that the  department has not comprehensively updated GFO requirements since  2003 or advocated for increased GFO statutory limits because of the  recent fiscal constraints faced by the department. However, without  periodically conducting a comprehensive update of DOD’s GFO  requirements, it will be difficult for DOD to help ensure that resources are  properly matched to the needs of today’s environment.
subsections: section_title: GFO Population Growth Was Generally Consistent with the Growth in Statutory Limits
paragraphs: In fiscal year 2001, there were 871 GFOs, growing to 943 by fiscal year  2013 for an 8 percent overall increase. This growth in the GFO population  was consistent with the growth in statutory limits for GFO positions, from  889 in fiscal year 2001 to 962 in fiscal year 2013, also an 8 percent  increase (see fig. 1). According to DOD officials, the growth in the GFO  population is attributable in part to increases in the number of commands;  growth in the number of headquarters staff members needed to support  overseas contingency operations; demand for GFOs to support overseas  contingency operations; and congressionally directed GFO positions,  such as the director of DOD’s Sexual Assault Prevention and Response  Office. Our body of work has found that new commands and  headquarters organizations have created additional requirements for  military personnel, including GFO positions, and we have recommended  that DOD take action to consolidate or eliminate military commands that  are geographically close or have similar missions, to seek opportunities to  centralize headquarters functions, and to periodically evaluate whether  the size and structure of commands meet assigned missions.generally concurred with our recommendations and specified steps it will  take in response, such as revising agency guidance and establishing  timelines for DOD organizations to review data on command personnel.
As shown in figure 1, from fiscal years 2006 through 2009 GFO end  strengths were above statutory limits. However, DOD officials explained  that these end strength data do not reflect exemptions applied by DOD to  certain GFO positions during those years, and which allowed the services  to exceed statutory limits on the numbers of GFOs. Specifically, GFOs  who were on terminal leave immediately prior to retiring were included in  end strength data, but were exempt from counting toward statutory limits.  Also, 10 U.S.C. § 527 provides the President with authority to suspend  the statutory limits on GFO numbers in time of war or national  emergency. DOD provided data for fiscal years 2011 through 2013 that  provided more detail on the department’s use of exemptions to manage  GFO numbers against statutory limits. These data showed that the  services claimed an average of 30 exemptions per fiscal year for GFOs.  DOD officials stated that it has been necessary to use such exemptions to  manage the GFO population since the population has been consistently  at the statutory limits, and the department needed flexibility to transition  GFOs into their new assignments with sufficient time to allow for  knowledge transfer from the GFOs they were replacing.
Department of Defense, General and Flag Officer Efficiencies Study Group (2011). This  study was conducted in response to direction from the Secretary of Defense to identify 50  GFO positions that would be eliminated within 2 years. The report noted that the effort  was not a GFO requirements validation. population is reduced, to preserve the department’s flexibility in managing  GFO assignments.
section_title: The Growth of Active Duty Military Personnel Varied across Populations
paragraphs: From fiscal years 2001 through 2013, as the nation’s military engaged in  combat operations in Iraq and Afghanistan, all populations of active duty  military personnel experienced periods of growth, with the total population  peaking at 1,417,200 in fiscal year 2010 (see fig. 2). However, this growth  was not consistently distributed across military populations.
Growth among active duty personnel varied across active duty military  populations. For example, growth of the GFO population after fiscal year  2005 outpaced that of the enlisted active duty military population and has  remained higher through fiscal year 2013. As the military began to draw  down after fiscal year 2010, enlisted personnel have dropped below fiscal  year 2001 levels while officers remained higher. Moreover, the ratios of  enlisted to non-GFO officers and enlisted to GFOs are both at their lowest  levels since prior to 2001 (5:1 and 1,200:1, respectively). DOD reported in  a 1988 officer requirements study that decreases in the enlisted to officer  ratio could reflect changing requirements for personnel. For example, the  study stated that a new weapon system may need fewer crew members  to operate it without changing the number of officers needed to lead the  units that use the system, or there may be new requirements for officers  in joint-service assignments and in research, development, or contracting  activities. DOD officials stated that during military drawdowns,  population decreases in the officer population tend to lag behind those of  the enlisted population and attributed this to the greater flexibility that  military planners have to decrease the enlisted population by rotating  them out of the active duty force, while officers tend to remain in theater  to manage the drawdown effort. The officials added that because the  officer population is much smaller than the enlisted population, relatively  small changes to this population can have greater relative effect, and that  they expect the officer population to follow a similar decrease as the  enlisted population in future years as senior officers retire.
section_title: DOD Has Not Updated GFO Requirements to Reflect Changes in the Active Duty Force since 2003
paragraphs: The last comprehensive update of DOD’s GFO requirements was in 2003  when Congress mandated that DOD study GFO statutory limits and  provide an assessment of whether statutory limits were sufficient to meet  all GFO requirements. Since that time, DOD has added new commands  and organizations, including U.S. Africa Command (2007), U.S. Cyber  Command (2010), the Sexual Assault Prevention and Response Office  (2006), and the Defense Health Agency (2013), all of which require  additional GFOs for senior leadership positions. For example, the fiscal  year 2012 National Defense Authorization Act mandated that the Director  position at the Sexual Assault Prevention and Response Office be  elevated and filled by either a GFO or a senior executive civilian DOD  employee. The office’s current director is now the third GFO to have  served in that position since the statute was passed. Also, in November  2013 we found that while the creation of the Defense Health Agency was  intended to reduce personnel costs, the organization added new GFO  positions at the two- and three-star ranks while retaining existing GFO  positions at the service level. We recommended, among other things,  that DOD provide Congress with a more thorough explanation of the  potential sources of cost savings and an estimate of the number of  military, civilian, and contractor personnel who will work in the  organization when it reaches full operating capability. DOD concurred  with our recommendations. Also, in the past decade, the military  concluded the Iraq war and is currently in the process of reducing its  presence in Afghanistan.
Department of Defense, Guidance for Manpower Management. higher than the GFO statutory limit of 1,311 positions by 319 positions (24  percent). However, DOD has not conducted a comprehensive update of  GFO requirements since then. In April 2004 we reviewed DOD’s 2003  GFO requirements study and recommended, among other things, that  DOD periodically update GFO requirements. DOD concurred with our  recommendation at the time, stating that a requirements database  maintained by each of the military services was adequate to update  requirements. However, as we noted in our 2004 report, DOD’s process  for updating the requirements database was not comprehensive. Since  2003, DOD has not conducted a comprehensive update of GFO  requirements. Also, as previously discussed, the ratio of enlisted  personnel to GFOs is at its lowest level since prior to 2001. These types  of changes to the active duty force suggest that an updated  comprehensive validation of GFO requirements against statutory limits  would help the department ensure that resources are properly matched to  the needs of today’s environment.
DOD completed a study in 2011 to determine opportunities for efficiency  gains in the GFO corps; the study noted that the objective was not to  determine GFO requirements but instead to identify organizational  efficiencies that would allow more effective alignment of the force to the  priority missions of the department. As such, the study did not identify,  assess, and validate positions that the department believes should be  filled by GFOs, nor did it assess the impact of any shortfall of GFOs on  the department’s mission. The study was conducted in response to  direction from the Secretary of Defense to review all active duty GFO  positions and their associated overhead and determine how to reallocate  positions such that at least 50 GFO positions would be eliminated within 2  years. The study identified 73 positions for elimination within 2 years, and  an additional 28 eliminations based on conditions in overseas  contingency operations. DOD officials said that these reductions are not  complete because of continuing overseas contingency operations and the  need to wait for GFOs serving in positions identified for elimination to  retire. In commenting on the study, some services disagreed with the  study’s recommendation to reduce GFO positions, noting that GFO  requirements had increased and that GFO reductions were not distributed  fairly across all of the services. DOD officials told us that there continues  to be a need for more GFOs than are authorized by Congress, but added  that the department has not comprehensively updated GFO requirements  since 2003 or advocated for increased GFO statutory limits because of  the recent fiscal constraints faced by the department. Without conducting  a comprehensive update of DOD’s GFO requirements—to include  identifying, assessing, and validating positions that the department  believes should be filled by GFOs; defining the circumstances under  which subsequent updates should occur; and assessing whether GFO  statutory limits are sufficient to meet GFO requirements—it will be difficult  for DOD to ensure that the GFO corps is properly sized and structured. It  will also be difficult for DOD to ensure that the department can identify  opportunities for managing these personnel and their associated  resources more efficiently.
section_title: The Full Cost of Active Duty GFOs Is Unknown; Trends in Available Costs Varied
paragraphs: The full cost to DOD for active duty GFOs from fiscal years 2001 through  2013 is unknown because complete cost data for GFOs and their aides  were not available. Data for compensation and housing were fully  available, and trends for those costs varied from fiscal years 2001  through 2013. Other costs, such as commercial travel and per diem and  military and government air travel, were either partially complete or  unavailable, thus affecting our ability to identify trends for those costs.  Our work found that data availability was affected by reporting practices,  retention policies, inconsistent definitions for certain cost elements, and  reliability factors. DOD guidance states that DOD officials must be aware  of the full costs of manpower, use these costs to support workforce  allocation decisions, and have a thorough understanding of the  implications of those costs to DOD and, on a broader scale, to the federal  government. By defining in guidance the officer aide position and GFO  and associated aide costs, DOD will be in a better position to help ensure  that a consistent approach is employed when estimating GFO and  associated aide costs, better account for the full costs of GFOs, and  improve its ability to make sound workforce allocation decisions.
subsections: section_title: Availability of GFO and Aide Cost Data Varied
paragraphs: The full cost to DOD for GFOs from fiscal years 2001 through 2013 is  unknown because complete cost data for GFOs and their aides were not  available. Elements of active duty GFO costs varied in availability from  fiscal years 2001 through 2013. We assessed cost elements as complete,  partially complete, or unavailable. Figure 3 depicts the extent to which  GFO costs were included in our review depending on factors such as  reporting practices, data retention policies, and data reliability factors,  including completeness and accuracy.
Certain GFO cost data are reported in budget materials or other formal  reports produced by DOD and were readily available for all of the years  included in our review. For example, population and cost data related to  GFO compensation were available in DOD budget materials and cost  memorandums for fiscal years 2001 through 2013. Similarly, cost data  related to GFO housing were reported annually per Title 10 of the U.S.  Code, for all of the fiscal years included in our review. In addition, using  DOD budget materials, we obtained data needed to estimate the tax  expenditure resulting from a portion of GFO compensation being tax  exempt.
subsections: section_title: Partial Data
paragraphs: Certain cost data within the scope of our review were not available for all  years. For example, complete cost data related to GFO commercial travel  and per diem expenditures were available from the Defense Travel  System for fiscal years 2009 through 2013. According to DOD officials,  the services did not fully transition to this system until fiscal year 2009,  and cost data predating that transition were spread across disparate  systems and not captured in a consistent manner. Similarly, GFO health  care cost data were not available prior to fiscal year 2003, because,  according to Defense Health Agency officials, DOD transitioned to a new  software system for tracking these costs in fiscal year 2003 and legacy  data were not migrated to the new system.
Cost data needed to calculate enlisted and officer aide compensation  costs were also partially complete. For example, the Navy and the Marine  Corps were unable to provide historical data on officer aides, such as  name, rank, and overall numbers. According to DOD officials, the position  of officer aide is not defined in departmental guidance because these  positions are not established in statute. As a result, the military services  were not able to provide consistent data for these personnel. Additionally,  the Marine Corps tracked enlisted aide numbers by calendar instead of  fiscal year, and the Navy was unable to provide enlisted aide numbers  and ranks for more than 2 fiscal years. Table 2 depicts the availability of  population data needed to calculate aide compensation.
Some GFO cost data were not readily available or were determined to be  unreliable—such as cost data related to GFO travel on military and  government flights and cost data associated with providing personal  security details to GFOs. While the magnitude of unavailable cost data  associated with GFO travel on military and government flights is unclear,  the Secretary of Defense has designated certain high-ranking GFOs,  including the Chairman and Vice Chairman of the Joint Chiefs of Staff,  service chiefs, and combatant commanders as “required use” travelers for  official air travel because of threats, secure communications  requirements, or scheduling requirements that make commercial travel  unacceptable. Other GFOs are not designated as required use  travelers, but may use U.S. government aircraft for official travel when the  travel complies with specified criteria and when the demands of their  travel prevent the use of commercial aircraft. Similarly, while we  obtained personal security cost data covering 27 organizations—including  the combatant commands, services, and other DOD organizations—DOD  officials told us that the data were likely underreported, and the costs  could not be separated by fiscal year or adjusted for inflation. Further,  DOD officials said that when asked for these data, service officials did not  include consistent information (such as costs associated with  compensation and travel, equipment, weapons, and vehicles of security  personnel) because of the lack of a department-wide definition for  security detail costs. As a result, these cost data were excluded from our  analysis.
Certain cost data related to enlisted and officer aides were also  unavailable. For example, the Army, the Navy, and the Marine Corps did  not track enlisted and officer aides by name and fiscal year and were  therefore unable to provide complete and accurate aide travel and per  diem cost data. Similarly, the Army and the Navy were unable to provide  enlisted and officer aide population data of sufficient detail—to include  names and duration in aide position—to identify aide housing costs.  Although the Air Force provided detailed aide population data, it did not  track aide housing costs. An official from the Marine Corps told us that  Marine aides were generally receiving a basic housing allowance, with  one enlisted aide residing in the Commandant’s quarters. In the absence  of enlisted and officer aide population data of sufficient consistency and  completeness, we were also unable to estimate the tax expenditure  associated with housing and subsistence allowances provided to aides.
The availability of enlisted and officer aide cost data was affected by the  extent to which the services defined and tracked aide personnel. DOD  officials told us that there is no department-wide definition for the position  of officer aide, and the Air Force is the only service that has established a  definition. Prior to March 2011, the secretaries of the military  departments were required to provide the Principal Deputy Under  Secretary of Defense for Personnel and Readiness biannual reports of  enlisted aide authorizations by military service and by GFO position.
However, that requirement was rescinded by the Secretary of Defense in  March 2011 as part of DOD’s efficiencies initiatives, and officials from the  Office of the Under Secretary of Defense for Personnel and Readiness  were not able to provide to us reports covering all of the years prior to the  removal of this requirement. Recognizing the need to improve oversight  of GFO costs, including costs associated with enlisted aides, DOD  officials stated that the department plans to reinstate the biannual  reporting requirement for enlisted aide authorizations in an upcoming  revision to the instruction, but has not established a time frame for  completing the revision. Reinstating this requirement could help DOD to  track the number of enlisted aides, along with certain related costs, such  as compensation. However, the department does not plan to include  officer aide population data in this instruction. Without a similar reporting  requirement for officer aide population data, DOD will not be able to  improve the availability of officer aide costs, such as compensation.
DOD Instruction 7041.04, Estimating and Comparing the Full Costs of Civilian and  Active Duty Military Manpower and Contract Support, (July 3, 2013). guidance on certain cost elements, such as training; develop business  rules for estimating Reserve and National Guard costs; evaluate inclusion  or non-inclusion of cost elements related to retirement; assess cost  models being used across the department; and reassess sources for  contractor data. DOD generally concurred with our recommendations but  has not completed actions.
Moreover, standards for internal control in the federal government state  that financial data are needed for external and internal uses, to make  operating decisions and to allocate resources, while federal accounting  standards similarly emphasize the need for managers to have relevant  and reliable information on the full costs of activities and changes in those  costs and the need for appropriate procedures to enable the collection,  analysis, and communication of cost information. We have placed DOD  on our High-Risk List for financial management beginning in 1995  because of financial management weaknesses that affect its ability to  control costs; ensure accountability; anticipate future costs and claims on  the budget; detect fraud, waste, and abuse; and prepare auditable  financial statements. We have reported that while DOD has made efforts  to improve financial management, it still has much work to do if it is to  meet its long-term goals of improving financial management and  achieving full financial statement auditability. By defining the officer aide  position and GFO and associated aide costs, DOD will be better  positioned to help ensure that a consistent approach is employed when  estimating GFO and associated aide costs, better account for the full  costs of GFOs, and improve its ability to make sound workforce allocation  decisions.
section_title: Trends in Complete and Partially Complete GFO and Aide Costs Varied
subsections: section_title: GFO Compensation Growth Was Consistent with That of Other Officers but Was Outpaced by Enlisted Personnel Compensation Growth
paragraphs: From fiscal years 2001 through 2013, GFO and other active duty  personnel compensation costs increased, with enlisted personnel  experiencing the highest percentage per capita cost growth. The following  information summarizes changes in inflation-adjusted costs to DOD to  provide compensation for active duty GFOs, non-GFO officers, and  enlisted personnel, as shown in figures 4 and 5.
GFOs. Total compensation costs grew from $199.4 million in fiscal  year 2001 to $274.4 million in fiscal year 2013 (38 percent). Per capita  costs grew from $228,129 to $268,187 (18 percent).
Non-GFO officers. Total compensation costs grew from $26.8 billion  in fiscal year 2001 to $36.8 billion in fiscal year 2013 (38 percent). Per  capita costs grew from $123,255 to $146,472 (19 percent).
Enlisted personnel. Total compensation costs grew from $64 billion in  fiscal year 2001 to $86.7 billion in fiscal year 2013 (35 percent). Per  capita costs grew from $55,325 to $73,056 (32 percent).
Figure 4 shows the percentage change in total compensation costs from  fiscal years 2001 through 2013, and figure 5 depicts the percentage  change in per capita compensation costs.
As shown in figure 5, enlisted personnel experienced the highest per  capita growth of the three populations we compared. Per capita costs  represent averages of what it costs DOD to compensate military  personnel across different ranks and services. We reported in March  2012 that the costs of military compensation have grown significantly, in  part because of increases in basic pay and deferred compensation, such  as health care benefits, for which DOD officials anticipate significant  continued growth because of expansions in health care coverage. Such  increases may explain the growth in per capita costs for GFOs, non-GFO  officers, and enlisted personnel. Cost growth specific to the GFOs and  non-GFO officers may also be attributed in part to the growth in each of  these populations, which increased at rates of 8 percent and 10 percent,  respectively. In contrast, the population of enlisted personnel in fiscal year  2013 was 2 percent below fiscal year 2001 levels, yet compensation  costs for these personnel remained 35 percent higher, outpacing growth  for both GFO and non-GFO officers.
For the purposes of this report, compensation costs were calculated using  DOD’s composite standard pay rates, which include the following  military personnel appropriation costs: average basic pay plus retired pay  accrual, Medicare-eligible retiree health care accrual, basic allowance for  housing, basic allowance for subsistence, incentive and special pay,  permanent change of station expenses, and miscellaneous pay. These  rates do not include the tax expenditure resulting from the federal  government not collecting taxes on basic allowances for housing and  subsistence. From fiscal years 2001 through 2013, the GFO tax  expenditure fluctuated but fell overall by approximately 1 percent, from an  average of $10,689 to an average of $10,604, based on our calculations.  Our total and per capita costs using the composite rates GFOs, non-GFO  officers, and enlisted personnel are based on active duty average  strengths from fiscal years 2001 through 2013. Appendix I provides  additional information regarding our approach to calculating total and per  capita compensation costs for both GFOs and other active duty  personnel.
section_title: Trends in Other GFO Costs Varied
paragraphs: Trends in other complete or partially complete GFO costs—such as  housing, travel and per diem, and official representation—varied from  fiscal years 2001 through 2013. The following sections describe these  costs across the fiscal years for which data were available and reliable for  the purposes of our review.
GFO Military Housing Costs from Fiscal Years 2001 through 2013  Inflation-adjusted GFO housing costs, depicted in figure 6, decreased  from $33.4 million in fiscal year 2001 to approximately $10.9 million in  fiscal year 2013—an overall decline of 67 percent. These costs include  operations, maintenance, utility, lease, and repair costs associated with  DOD-owned and leased properties, as well as certain costs associated  with privatized housing. According to DOD officials, DOD’s housing  privatization initiative contributed to the cost decrease beginning in fiscal  year 2005. DOD policy establishes private sector housing as the  primary source of housing for military personnel within the United  States. However, the lack of suitable available housing in the  community, along with housing requirements for key personnel—such as  GFOs—may require military housing on an installation. The number of  GFOs residing in DOD-owned or DOD-leased properties decreased from  790 in fiscal 2001 to 240 in fiscal year 2013.
GFO Commercial Travel and Per Diem Costs from Fiscal Years 2009  through 2013  GFO commercial travel and per diem costs, adjusted for inflation, grew  from $25.9 million in fiscal year 2009 to $34.6 million in fiscal year 2012,  before decreasing to $27.0 million in fiscal year 2013—for an overall  increase of approximately 4 percent. DOD uses commercial providers to  transport military personnel, including GFOs.travel, including airfare, meals and incidentals, lodging, rental cars, and  mileage, were available from the Defense Travel System for fiscal years  2009 through 2013. According to an official from the Defense Logistics  Agency, the recent decline in GFO commercial travel and per diem costs   Costs for GFO commercial  is attributable in part to the effects of sequestration, and in part to  DOD’s efforts to reduce spending on travel and conferences. As  previously discussed, cost data prior to 2009 were not included in our  analysis because pre-2009 data in the Defense Travel System were  incomplete and not captured in a consistent manner.
GFO Health Care Costs from Fiscal Years 2003 through 2013  GFO health care costs, adjusted for inflation, rose from approximately  $11.7 million in fiscal year 2003 to approximately $20.6 million in fiscal  year 2013, an overall increase of 77 percent. Per capita health care costs  increased from $12,744 in fiscal year 2003 to $20,179 in fiscal year 2013,  an increase of 58 percent. GFOs, like all active duty military personnel,  have access to health care provided through TRICARE. GFO health  care under TRICARE includes direct care (i.e., medical care provided by  the U.S. military health system), purchased care (i.e., medical care  provided by private sector providers in the networks outside of the military  health system), and pharmacy costs for both GFOs and their  dependents. GFOs also have access to health care at the Executive  Medicine Clinic at Walter Reed National Military Medical Center and the  Executive Services Health and Wellness Clinic at Fort Belvoir Community  Hospital. According to these organizations, the clinics ensure availability,  security, and confidentiality for military and government executives,  including GFOs, select executive branch civilian executives, members of  the U.S. Congress, and foreign dignitaries. GFO health care costs tracked  by the Military Health System Data Repository, such as those costs  associated with executive medicine clinics, are included in this report;  however, the data repository is not structured to allow executive medicine  clinic costs specifically associated with GFOs to be separately extracted.  As mentioned earlier in this report, we determined that costs prior to fiscal  year 2003 were not available because Defense Health Agency officials  told us that the TRICARE Management Activity transitioned to a new  software system at that time and legacy data were not migrated into the  new system.
The increase in per capita health care costs is consistent with growth in  overall health care costs in the Military Health System. We reported in  November 2013 that DOD’s Military Health System costs have grown  from $19 billion in fiscal year 2001 to the fiscal year 2014 budget request  of $49.4 billion. An advisory committee to the Secretary of Defense has  cited increased utilization of services, increasingly expensive technology  and pharmaceuticals, and the aging of the retiree population as reasons  for increasing health care costs. We have reported on DOD’s military  health governance structure and the need for sustained senior leadership  to achieve desired cost savings and found that DOD senior leadership  has demonstrated a commitment to oversee implementation of its military  health system’s reform and has taken a number of actions to enhance  reform efforts.
GFO Official Representation Costs from Fiscal Years 2008 through  2013 for the Air Force, Marine Corps, and Navy  Total official representation costs across the Air Force, the Marine Corps,  and the Navy dropped 29 percent from fiscal years 2008 through 2013.  GFOs, along with members of the Senior Executive Service, have the  authority to use official representation funds to host guests of the United  States and DOD, such as civilian or military dignitaries and officials of  foreign governments. We received complete official representation costs  from the Air Force, the Marine Corps, and the Navy for fiscal years 2008  through 2013. The Army provided cost data for fiscal years 2001  through 2013, but these data were determined to be unreliable because  of anomalies identified across multiple years. The official representation  cost data were reported in aggregate, by service, and were therefore not  attributable specifically to GFOs. As shown in table 3, inflation-adjusted  official representation costs across the Navy, the Marine Corps, and the  Air Force remained relatively constant from fiscal years 2008 through  2012, before dropping in fiscal year 2013. A Navy official attributed the  decrease in Navy representation costs to the fiscal year 2013 budget  sequester.
GFO Executive Training Costs from Fiscal Years 2001 through 2013  From fiscal years 2001 through 2013, the cost of GFO-specific training  courses declined from $2.4 million to $1.8 million, a decrease of about 27  percent. Military officers, including GFOs, are encouraged to enroll in  courses to further their military education. Two of these courses,  CAPSTONE and PINNACLE, are specific to GFOs and are administered  by the National Defense University. These courses are designed to  prepare senior officers of the U.S. armed forces for high-level joint,  interagency, intergovernmental, and multinational responsibilities.  CAPSTONE is a statutorily mandated course for newly selected GFOs  administered over 5 weeks involving travel to domestic and international  locations. The course objective is to make these individuals more  effective in planning and employing U.S. forces in joint and combined  operations. PINNACLE is a 1-week classroom course designed to  prepare GFOs for senior political and military positions and command of  joint and coalition forces at the highest level. On average, according to  DOD data, CAPSTONE courses cost $15,684 per student from fiscal  years 2001 through 2013, and PINNACLE courses cost $4,067 per  student from fiscal years 2008 through 2013. Officials from the National  Defense University told us that costs declined because the length of the  CAPSTONE course was changed from 6 to 5 weeks beginning in 2012.
Aide Compensation in the Army and the Air Force from Fiscal Years  2003 through 2013  Compensation costs for enlisted aides in the Army and Air Force—the  number of which are authorized by Congress—grew 10 percent from  fiscal years 2003 through 2013, from approximately $14.1 million to $15.5  million. Enlisted aide compensation costs within each of these services  fluctuated from year to year but also increased overall during this period.  This is due in part to fluctuations in the overall number and rank  distribution of enlisted aides within each service. Specifically, during this  period the number of enlisted aides in the Army fluctuated from 70 to 97,  while the number of Air Force enlisted aides ranged from 73 to 88. From  fiscal years 2003 through 2013, on average, the ratio of enlisted aides to  GFOs in the Army was 1:4, and the ratio of enlisted aides to GFOs in the  Air Force was 1:3.5.
Adjusting for changes in the aide population, we estimate that the  average per capita compensation cost for enlisted aides in both the Army  and the Air Force increased from $84,519 to $100,028, an increase of 18  percent. Figure 7 shows the percentage change in total and per capita  enlisted aide costs from fiscal years 2003 through 2013 for the Army and  the Air Force. Costs for the Marine Corps and the Navy could not be  determined because the Marine Corps could not provide data by fiscal  year and the Navy was able to provide only 2 years of enlisted aide  personnel data.
Compensation costs for officer aides in the Army and the Air Force grew  8 percent from fiscal years 2003 through 2013, from approximately $28.9  million to $31.1 million. Officer aide compensation costs within each of  these services also generally increased during these years but fluctuated  depending on the number and distribution of aides across ranks. The  number of officer aides in the Air Force ranged from 22 to 47, while the  number of officer aides in the Army ranged from 191 to 228.
Adjusting for changes in population, we estimate that the average per  capita compensation cost for officer aides in both the Army and the Air  Force increased from $125,759 to $140,288, an increase of 12 percent.  Figure 8 shows the percentage change in total and per capita officer aide  costs from fiscal years 2003 through 2013 for the Army and the Air Force.  As previously mentioned, costs for the Marine Corps and the Navy could  not be determined because these services did not track the number of  officer aide personnel.
Aide Travel and Per Diem for the Air Force from Fiscal Years 2007  through 2013  The travel and per diem costs for enlisted and officer aides in the Air  Force rose from approximately $862,000 in fiscal year 2007 to  approximately $1.3 million in fiscal year 2010, before decreasing to  approximately $768,000 in fiscal year 2013—an overall decrease of  approximately 11 percent. As mentioned previously, the Army, Navy, and  Marine Corps did not have enlisted and officer aide population data of  sufficient detail to query the Defense Travel System for travel costs  associated with those aides.
section_title: Conclusions
paragraphs: Given the federal government’s continuing fiscal challenges, it is more  important than ever that Congress, the administration, and managers at  DOD have reliable, useful, and timely financial information to help ensure  fiscal responsibility and demonstrate accountability, particularly for the  elite leaders responsible for planning and implementing military  operations across the department. As DOD officials continue to manage  implementation of the fiscal year 2013 budget sequester, GFOs and  related support costs are one of the areas in which efficiencies and  reductions are being considered. However, DOD officials have voiced  concern about reductions in this area and the need to retain flexibilities in  staffing GFOs because of additional commands, joint responsibilities, and  the potential to respond to future contingencies. These competing needs  underscore the importance of DOD periodically conducting a  comprehensive update of GFO requirements to efficiently manage the  elite leaders of the military while also providing validation for existing and  emerging needs. Moreover, if DOD had complete information on the costs  of people and resources required to support the GFO corps (such as aide  compensation and travel costs), the department would have an improved  ability to manage these resources. More specific and complete definitions  of GFO- and aide-associated costs would better position DOD to have  more detailed and readily available information on these costs to help  decision makers in DOD and Congress to balance resource priorities in a  fiscally challenging environment. As the department realigns itself to  address new challenges, full awareness of the GFO requirements and  costs would help the department to provide congressional decision  makers with the information needed for effective oversight and help  ensure the efficient use of resources.
section_title: Recommendations for Executive Action
paragraphs: We are making five recommendations to help DOD to improve  management of GFO requirements and collect more detailed information  on associated costs. To determine the number of GFOs required for  DOD’s mission, we recommend that the Secretary of Defense take the  following action:
Direct the Under Secretary of Defense for Personnel and Readiness,  in coordination with the secretaries of the military departments, to  conduct a comprehensive update for GFO requirements by  identifying, assessing, and validating positions that the department  believes should be filled by GFOs, and define the circumstances  under which subsequent periodic updates should occur. The update  should include an assessment of whether GFO statutory limits are  sufficient to meet GFO requirements and the impact of any shortfall  on the department’s mission.
To help improve the definition and availability of costs associated with  GFOs and aides, we recommend that the Secretary of Defense take the  following four actions:
Direct the Under Secretary of Defense for Personnel and Readiness  finalize the enlisted aide population data biannual reporting  requirement in the revised DOD Instruction 1315.09, define the position of officer aide, and require the military departments to report on officer aide  population data.
Direct the Director, Cost Assessment and Program Evaluation, in  coordination with the Under Secretary of Defense for Personnel and  Readiness and the secretaries of the military departments, to define  the costs that could be associated with GFOs—such as security  details—for the purpose of providing a consistent approach to  estimating and managing the full costs associated with GFOs.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this product from the Department  of Defense. On August 29, 2014, the Deputy Director, Military  Compensation Policy in the office of the Under Secretary of Defense for  Personnel and Readiness provided DOD’s comments in an email. DOD  also provided technical comments, which have been included as  appropriate. In summary, DOD partially concurred with four of the five  recommendations, and did not concur with one.
DOD partially concurred with the first recommendation to conduct a  comprehensive update for GFO requirements and define the  circumstances under which periodic updates should occur. In its  comments DOD stated that the recommendation is prudent given the  changing operational environment and requirements. However, DOD also  stated that defining the circumstances of a periodic review would impede  the department’s ability to provide flexibility on future requirements and  engagements. The intent of the recommendation was to help ensure that  regular updates of GFO requirements are conducted—as the report  notes, DOD last completed a comprehensive update of GFO  requirements in 2003. We believe that DOD can define the circumstances  for updating GFO requirements while retaining the ability to provide  flexibility on future requirements and engagements, for example, by  specifying conditions that may require a change to the frequency or scope  of requirements updates. We continue to believe that fully addressing this  recommendation by defining the circumstances under which periodic  updates should occur would allow the department to efficiently manage  the GFO population while also providing validation for existing and  emerging needs.
DOD partially concurred with the second, third, and fourth  recommendations to establish guidance to finalize the enlisted aide  population data biannual reporting requirement in the revised DOD  Instruction 1315.09, define the position of officer aide, and require the  military departments to report on officer aide population data. In its  comments, DOD stated that the department concurred with providing  biannual reports on enlisted aides and is taking steps to incorporate a  new requirement for reports in the updated instruction governing the use  of enlisted aides. As noted in the report, DOD has not established a time  frame for completing the revision. DOD also stated that officer aide  assignments are more along the lines of professional development and  staff officer experience, allowing the services flexibility to ensure a broad  scope of professional development in an operational or training  environment. Further, DOD stated that the department will continue to  allow the services to manage officer aides at the local level. However, as  noted in the report, due to the lack of a department-wide definition for  officer aides, the military services were not able to provide consistent data  for these personnel, including cost data. Moreover, the report notes that  the lack of a definition for officer aides is preventing DOD from having  visibility over the costs associated with those personnel, and from  including such costs when calculating the full costs of the GFO  population.  We continue to believe that defining the position of officer  aide and requiring the military departments to report on the number of  personnel assigned to these positions would improve the availability of  cost information associated with the GFO population.
Finally, DOD did not concur with the fifth recommendation to define the  costs associated with GFOs—such as security details—for the purpose of  providing a consistent approach to estimating the full costs associated  with GFOs. We modified the recommendation first provided to DOD in our  draft report in response to technical comments from the Cost Assessment  and Program Evaluation office. Specifically, the original recommendation  was for the Director, Cost Assessment and Program Evaluation, in  coordination with the Under Secretary of Defense for Personnel and  Readiness and the secretaries of the military departments, to define the  costs associated with GFOs—such as security details and other relevant  costs. We modified this recommendation to include the clause “…costs  that could be associated with GFOs…” (emphasis added) and to delete  the phrase “and other relevant costs.” We made this change because  officials from the Cost Assessment and Program Evaluation office told us  that the original recommendation did not provide them with needed  flexibility to decide which GFO associated costs to define. However, DOD  did not concur with the modified recommendation.
In its comments, DOD stated that the department did not agree with the  recommendation for two reasons. First, DOD stated it already defines the  full manpower costs associated with GFOs in DOD Instruction 7041.04  (Estimating and Comparing the Full Costs of Civilian and Active Duty  Military Manpower and Contract Support). Second, DOD stated that  security details and aides assigned to GFOs are managed by the services  and are included in their personnel costs, and that those billets should not  be included with the costs associated with GFOs. As stated in the report,  certain costs associated with GFOs—such as security details and officer  aides—were unavailable because the cost elements were not defined.  For example, we reported that, according to DOD officials, the military  services do not report security detail costs consistently because without a  department-wide definition such costs could include compensation, travel,  equipment, weapons, and vehicles. Moreover, the Federal Accounting  Standards Advisory Board has noted that a cost methodology should  include any resources directly or indirectly used to perform work, and  GFO’s often rely upon security details and officer aides to carry out their  responsibilities. The report also stated that DOD Instruction 7041.04, and  the accompanying tool developed by CAPE, are intended to collect cost  elements required to estimate the full cost of military and civilian  personnel. In commenting on the draft report, DOD did not address the  issue of using these full costs to estimate and compare personnel costs  and to support workforce allocation decisions, for example, when deciding  whether a function should be performed by civilian or military personnel.  Without a department-wide definition of the costs associated with GFOs— such as security details, and other relevant costs—the department is  unable to include the full costs of GFOs as specified by DOD Instruction  7041.04 when making workforce allocation decisions. As a result, we  continue to believe that formulating a consistent definition of the costs  associated with GFOs—such as security details, and other relevant  costs—for purposes of making specific comparisons of individual  functions would enhance the department’s ability to consistently estimate  the full costs associated with GFOs.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the Under Secretary of Defense  for Personnel and Readiness, the Secretaries of the Air Force, the Army,  and the Navy, and the Director, Cost Assessment and Program  Evaluation. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-3604 or farrellb@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix II.
section_title: Appendix I: Scope and Methodology
paragraphs: To identify any changes in the population and statutory limits for active  duty general and flag officers (GFO) relative to other active duty  personnel for fiscal years 2001 through 2013, we reviewed the relevant  U.S. Code provisions (10 U.S.C. §§ 525 and 526) as applicable and  amended for each of these years, and obtained, analyzed, and assessed  the reliability of end strength population data from the Defense Manpower  Data Center. We included population data from fiscal years 2001 through  2013 in our review to be consistent with the time frame included in our  review of trends in GFO costs. The scope of our analysis included only  those personnel on active duty; we did not include reserve component  personnel in our review. We also obtained more detailed GFO population  data from the Department of Defense (DOD) for fiscal years 2011 through  2013 and analyzed these data for contextual information, such as the  exemptions the services applied to GFO positions that were above  statutory limits. To determine the extent to which DOD updated GFO  requirements since 2003, we met with officials at the Office of the  Secretary of Defense and the military services responsible for GFO  management, reviewed relevant GAO and DOD studies, conducted trend  analyses and discussed reasons for population changes, and reviewed  relevant DOD policies and guidance. We assessed the information we  collected against DOD guidance that requires military and civilian  personnel resources to be programmed in accordance with validated  requirements that are periodically reevaluated, and a best practices  model for strategic human capital management.
To assess what is known about the costs associated with the active duty  GFO population and their aides and any trends in such costs from fiscal  years 2001 through 2013, including trends in GFO compensation relative  to that of other active duty personnel, we identified the relevant DOD,  component, and service offices responsible for managing active duty  GFOs and enlisted and officer aides, along with related military personnel  and operations and maintenance costs, such as compensation, housing,  and travel; met with officials at these offices to determine the extent to  which data were available; obtained and assessed the reliability of  available data; and analyzed available data, when possible. We identified  criteria in DOD guidance, federal internal control standards, and federal  accounting standards that specify the need for full and reliable manpower  and other cost data for the purpose of making operating decisions and  allocating resources, and assessed the availability of GFO cost data  against those criteria. We defined the GFO-related costs included in our  scope as those costs that were (1) specified in the congressional reports  that mandated our work, (2) consistent with prior GAO work on military  compensation, or (3) determined as GFO-related costs based on  discussions with knowledgeable officials. To determine the extent to  which data on GFO-related costs were available, we categorized each  cost element as “complete,” “partially complete,” or “unavailable” based  on the availability, completeness, and reliability of data provided for fiscal  years 2001 through 2013. Cost data that were determined to be  “complete” were readily available for all of the years included in our  review. Cost data that were determined to be “partially complete” were  either not available or not reliable for all years. “Unavailable” cost data  were either not readily available or were determined to be unreliable  across all of the years included in our review. Specifically, we took the  following steps to obtain, analyze, and assess the reliability of GFO and  aide cost data:  Compensation costs (GFOs, aides, non-GFO officers, and enlisted  personnel)
We used DOD’s composite standard pay rates to calculate the cost of  compensation provided to active duty GFOs and enlisted and officer  aides from fiscal years 2001 through 2013. The composite rates are used  by DOD when determining the military personnel appropriations cost for  budget and management studies. The rates include average basic pay  plus retired pay accrual; Medicare-eligible retiree health care accrual;  basic allowances for housing and subsistence; incentive, miscellaneous,  and special pays; and permanent change of station expenses. The  composite rates pool these cost elements together, as such trends for  discrete compensation cost elements could not be determined from these  data. Our previous work has recognized that there are multiple ways of  estimating the compensation costs of military personnel depending on the  mix of cash, such as basic pay; noncash benefits, like health care; and  deferred compensation, such as retirement pension. studies have used varying approaches to study military compensation,  certain elements of compensation are commonly incorporated into these  assessments—for example, cash compensation beyond basic pay to  include housing and subsistence allowances, the federal income tax  advantage, and special and incentive pays. We used DOD’s composite  rates to calculate compensation in part because they allowed us to obtain  data specific to the GFO population over the timeframe covered by our  review.
GAO-10-561R. for officer and enlisted aides across all the services because of the limited  availability of aide population data. We normalized all compensation costs  that we were able to calculate to fiscal year 2013 dollars by using the  employment cost index published by the U.S. Bureau of Labor Statistics.
DOD’s composite rate uses a standard factor to calculate deferred costs  (i.e., pension and retiree health care costs) for all active duty personnel,  which does not account for the significant differences in retirement rates  across ranks that we have previously reported. For example, we reported  in 2005 that an estimated 15 percent of new enlisted personnel and 47  percent of new officers become eligible to receive pensions and retiree  health care. Also, GFOs generally have already completed 20 years of  service at the time of their promotion to the GFO ranks, and as such the  retirement rate of GFOs is closer to 100 percent. Therefore, DOD’s  approach to calculating the composite rate may significantly undercount  the cost of providing retirement benefits to GFOs.
We also used data supplied by the Office of the Under Secretary of  Defense (Personnel and Readiness) to estimate the tax expenditure  resulting from a portion of GFO compensation being tax exempt. value of tax-exempt allowances (basic allowance for subsistence, basic  allowance for housing) depends on a servicemember’s pay grade, years  of service, and number of dependents. To estimate the tax expenditure  for each combination of pay grade (within the range of GFO pay grades),  years of service, and number of dependents, we estimated the amount  paid in taxes if the allowances are taxed and if they are not taxed, using  estimates of applicable marginal tax rates supplied by the National  Bureau of Economic Research. A weighted average of the differences in  tax liability was then created based on the proportion of GFOs in each  pay grade, years of service, and number of dependents category.
The tax expenditure is the tax revenue forgone by the federal government by the policy of  not taxing the basic allowance for housing and the basic allowance for subsistence. reimbursement.in aggregate, by fiscal year, so we were not able to assess trends across  the military services. GFO travel costs prior to fiscal year 2009 were not  available because not all military services transitioned to the Defense  Travel System at the same time and not all legacy data were migrated to  the new system. Aide travel and per diem cost data reported by the Air  Force covered both enlisted and officer aides from fiscal years 2007  through 2013. The Marine Corps reported incomplete aide travel costs for  personnel who were still on active duty that we excluded from our  analysis, while the Army and the Navy did not report aide travel costs.  The travel costs we analyzed were normalized to fiscal year 2013 dollars  using the gross domestic product price index published by the U.S.  Department of Commerce, Bureau of Economic Analysis.
GFO cost data from 2009 through 2013 were reported  GFO military/government air travel costs. We requested but did not  obtain costs for GFO travel on military aircraft for fiscal years 2001  through 2013 from the military services, U.S. Transportation Command,  the Defense Logistics Agency, and the U.S. Army Corps of Engineers. It  is DOD policy that these data be retained for a period of 2 years, but cost  data were not readily available. Ancillary costs associated with these  flights, such as lodging, were included in our analysis of commercial  travel data.
GFO housing. We obtained data on the costs of housing units used as  quarters for GFOs from fiscal years 2001 through 2013 from the annual  GFOs’ quarters expenditure reports produced by the Office of the Under  Secretary of Defense (Comptroller)covering fiscal year 2001 Defense Logistics Agency costs, also provided  by the Comptroller’s office. These costs include operations, maintenance,  utility, lease, and repair costs associated with DOD-owned and leased  properties, as well as certain costs associated with privatized housing.  The housing costs we analyzed were normalized to fiscal year 2013   and a supplementary data set  dollars using the gross domestic product price index published by the  U.S. Department of Commerce, Bureau of Economic Analysis.
GFO health care. We obtained data on the costs of health care provided  to active duty GFOs and their dependents from fiscal years 2003 through  2013 from the Defense Health Agency. These costs include direct care  (i.e., medical care provided by the U.S. military health care system),  purchased care (i.e., medical care provided by private sector providers in  the networks outside of the military health care system), and pharmacy  costs for both GFOs and their dependents. These data include GFO  health care costs incurred at the Executive Medicine Clinic at Walter  Reed National Military Medical Center and the Executive Services Health  and Wellness Clinic at Fort Belvoir Community Hospital. However, while  costs associated with executive medicine are included in the health care  cost data we obtained, executive medicine costs associated with GFOs  could not be separated from costs associated with other individuals  eligible for executive medicine care and are therefore not separately  reported. Cost data were normalized to fiscal year 2013 dollars using the  gross domestic product price index published by the U.S. Department of  Commerce, Bureau of Economic Analysis. We determined that costs prior  to fiscal year 2003 were not reliable because legacy data were not  migrated into the new system when data formats in the Defense  Enrollment Eligibility Reporting System were changed in fiscal year 2003.
GFO security details. We obtained data on the costs of security details  provided to GFOs from fiscal years 2001 through 2013 from 27 different  DOD organizations, including combatant commands, services, and other  DOD organizations. These data included costs such as pay, travel, and  equipment associated with personnel assigned to protective security  details. Some of the DOD organizations provided fiscal year expenditures  to us, while others reported a total sum of costs over a period covering  several fiscal or calendar years. DOD officials told us that the costs were  likely underreported. As a result, these data were excluded from our  analysis.
GFO official representation. We obtained complete official  representation costs from the Air Force, Navy, and Marine Corps for fiscal  years 2008 through 2013. The Army provided cost data from fiscal years  2001 through 2013, but data for certain years were inaccurate and the  data set was therefore deemed unreliable for our purposes. The Navy  also provided cost data from fiscal years 2001 through 2007, but these  data were excluded from our department-wide analysis in order to present  a consistent range of data. Official entertainment and representation cost  data were reported in aggregate by service. As a result, costs attributable  to GFOs could not be separated from those attributable to senior civilian  officials. The cost data were normalized to fiscal year 2013 dollars using  the gross domestic product price index published by the U.S. Department  of Commerce, Bureau of Economic Analysis.
GFO executive training. We obtained costs for the CAPSTONE and  PINNACLE training courses, which are specific to GFOs and are  administered by the National Defense University. The National Defense  University provided complete cost data for CAPSTONE from fiscal years  2001 through 2013. Cost data for PINNACLE were provided for fiscal  years 2005 through 2013, but data for fiscal years 2005 through 2007  were excluded from our analysis because during this time the National  Defense University combined costs for PINNACLE with another course  (KEYSTONE). As such, we determined that PINNACLE data from fiscal  years 2005 through 2007 were unreliable for our purposes. The cost data  were normalized to fiscal year 2013 dollars using the gross domestic  product price index published by the U.S. Department of Commerce,  Bureau of Economic Analysis.
To assess the reliability of population and cost data obtained for GFOs  and other active duty personnel—including non-GFO officers, enlisted  personnel, and officer and enlisted aides—we interviewed, corresponded  with, or administered questionnaire(s) to ascertain the process by which  data were compiled and to identify data aggregation, storage, reporting,  and quality control processes. We also independently assessed the  completeness of the data and coordinated with the appropriate officials to  resolve any data anomalies, and reviewed available documentation  describing the processes or system(s) used to house relevant data and to  identify issues material to data reliability. We did not assess all of the  processes used to create or assemble certain data, such as data sets  assembled by DOD officials from multiple sources. We determined that  certain data were not sufficiently reliable for the purpose of our review  based on the presence of significant errors or incompleteness in some or  all of the key data elements, or because using the data might lead to an  incorrect or unintentional message. As discussed above, those data were  excluded from our analyses. We believe the cost and population data that  we did include in this report are sufficiently reliable for the purposes of  assessing GFO and other active duty population trends and for  determining the costs associated with GFOs and other active duty  personnel from fiscal years 2001 through 2013.
In addressing both of our audit objectives, we contacted officials from the  following DOD organizations:
Office of the Secretary of Defense, Cost Assessment and Program
Office of the Under Secretary of Defense for Personnel and
Office of the Assistant Secretary of Defense for Homeland Defense  and Americas’ Security Affairs
The Joint Chiefs of Staff, Directorate for Logistics (J-4)
National Defense University
Defense Manpower Data Center
Defense Health Agency
Office of the Under Secretary of Defense (Comptroller)
Defense Logistics Agency
Defense Travel Management Office
U.S. Army
U.S. Navy
U.S. Marine Corps
U.S. Air Force  We conducted this performance audit from November 2013 to September  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Margaret A. Best (Assistant  Director), Timothy J. Carr, Grace Coleman, Ryan D’Amore, Foster  Kerrison, Michael Silver, Amie Steele, and Sabrina Streagle made key  contributions to this report.
section_title: Related GAO Products
paragraphs: Defense Headquarters: DOD Needs to Reevaluate Its Approach for  Managing Resources Devoted to the Functional Combatant Commands.  GAO-14-439. Washington, D.C.: June 26, 2014.
Defense Headquarters: Guidance Needed to Transition U.S. Central  Command’s Costs to the Base Budget. GAO-14-440. Washington, D.C.:  June 9, 2014.
Human Capital: Opportunities Exist to Further Improve DOD’s  Methodology for Estimating the Costs of Its Workforces. GAO-13-792.  Washington, D.C.: September 25, 2013.
Financial and Performance Management: More Reliable and Complete  Information Needed to Address Federal Management and Fiscal  Challenges. GAO-13-752T. Washington, D.C.: July 10, 2013.
Defense Headquarters: DOD Needs to Periodically Review and Improve  Visibility Of Combatant Commands’ Resources. GAO-13-293.  Washington, D.C.: May 15, 2013.
Defense Headquarters: Further Efforts to Examine Resource Needs and  Improve Data Could Provide Additional Opportunities for Cost Savings.  GAO-12-345. Washington, D.C.: March 21, 2012.
Military Cash Incentives: DOD Should Coordinate and Monitor Its Efforts  to Achieve Cost-Effective Bonuses and Special Pays. GAO-11-631.  Washington, D.C.: June 21, 2011.
Opportunities to Reduce Potential Duplication in Government Programs,  Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington,  D.C.: March 1, 2011.
Questions for the Record Related to Military Compensation.  GAO-10-803R. Washington, D.C.: June 3, 2010.
Military Personnel: Military and Civilian Pay Comparisons Present  Challenges and Are One of Many Tools in Assessing Compensation.  GAO-10-561R. Washington, D.C.: April 1, 2010.
Military Personnel: Military Departments Need to Ensure That Full Costs  of Converting Military Health Care Positions to Civilian Positions Are  Reported to Congress. GAO-06-642. Washington, D.C.: May 1, 2006.
Military Personnel: DOD Needs to Improve the Transparency and  Reassess the Reasonableness, Appropriateness, Affordability, and  Sustainability of Its Military Compensation System. GAO-05-798.  Washington, D.C.: July 19, 2005.
Military Personnel: DOD Could Make Greater Use of Existing Legislative  Authority to Manage General and Flag Officer Careers. GAO-04-1003.  Washington, D.C.: September 23, 2004.
Military Personnel: General and Flag Officer Requirements Are Unclear  Based on DOD’s 2003 Report to Congress. GAO-04-488. Washington,  D.C.: April 21, 2004.
A Model of Strategic Human Capital Management. GAO-02-373SP.  Washington, D.C.: March 15, 2002.