Military Compensation: Additional Actions Are Needed to Better Manage Special and Incentive Pay Programs
Published: 2017-02-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD uses S&I pay programs to compensate and incentivize servicemembers for occupations that are dangerous, less desirable, or require special skills. Senate Report 114-49 included a provision for GAO to review the effectiveness of DOD's S&I pay programs. This report assesses (1) trends in DOD obligations for S&I pay programs for fiscal years 2005 through 2015 and the extent to which DOD reports such obligations department-wide; and (2) the extent to which the military services applied key principles of effective human capital management in the design of S&I pay programs for selected high-skill occupations for fiscal years 2010 through 2015.
GAO analyzed DOD S&I pay obligations for fiscal years 2005 through 2015; reviewed a nongeneralizable sample of S&I pay programs for nuclear propulsion, aviation, and cybersecurity occupations, chosen based on their pay programs' attributes; compared DOD and service policies and documents with key principles of effective human capital management; and interviewed DOD officials.
section_title: What GAO Found
paragraphs: The Department of Defense's (DOD) special and incentive (S&I) pay obligations for active duty servicemembers decreased from fiscal years 2005 through 2015 from $5.8 billion to $3.4 billion (about 42 percent) in constant 2015 dollars (see fig.). DOD officials attributed the decrease to a combination of reduced overseas contingency operations, a reduced annual average strength of the force, and a favorable recruiting climate. DOD does not collect and report complete S&I obligation data for the reserve components because, according to officials, there is no requirement to do so and the services would likely need to make changes to their financial and personnel systems to separately track the obligations. However, according to officials, DOD has not explored cost-effective approaches to collect and report this information, which would better position the department to know the full cost of its S&I pay programs.
The military services largely applied key principles of effective human capital management in the design of their S&I pay programs for nuclear propulsion, aviation, and cybersecurity occupations. However, the application of these key principles varied by service and occupation. Only the Navy's S&I pay programs for nuclear propulsion and aviation fully addressed all seven principles; programs for other occupations and services generally exhibited a mixture of full and partial application. GAO found that, according to officials, DOD and the services had not taken steps to fully ensure consistent application of the principles. For example, DOD has not reviewed the extent to which its S&I pay programs have incorporated principles of effective human capital management and used resources efficiently. DOD also has not established related measures to ensure efficient use of resources. Without such measures, DOD and the services generally assess the effectiveness of S&I pay programs by the extent to which they achieve desired staffing targets. However, this approach does not ensure that S&I pay programs are using resources in the most efficient manner, as DOD guidance requires. Until DOD reviews the extent to which S&I pay programs have incorporated human capital management principles and used resources efficiently—and develops related measures for efficient use of resources—DOD and the services may lack assurance that S&I pay programs are effective and that resources are optimized for the greatest return on investment.
section_title: What GAO Recommends
paragraphs: GAO is making five recommendations, including that DOD explore reporting reserve S&I pay program data, review the incorporation of human capital management principles and use of resources, and develop related measures. DOD concurred with three recommendations and partially concurred with two. GAO continues to believe that actions to fully address these two recommendations are needed, as discussed in the report.

section_title: Letter
paragraphs: The Department of Defense (DOD) uses special and incentive (S&I) pay  programs as tools in its compensation system to help ensure that military  pay is sufficient to field a high-quality, all-volunteer force, including those  in hard-to-fill or critical specialties. Collectively, these pay programs aim  to help DOD compensate and incentivize servicemembers for  occupations that are dangerous, are less desirable, or require special  skills and training for which higher compensation is available in the  civilian labor market. In fiscal year 2015, DOD obligated more than $3.4  billion for S&I pays, representing about 3.3 percent of its budget for active  duty cash compensation.
Cash compensation, which includes S&I pays and basic pay, is part of a  comprehensive compensation package that the department provides to  military personnel, which also includes noncash benefits such as health  care and deferred compensation such as retirement pensions. In its  budget request for fiscal year 2017, DOD noted that it must sustain a  robust pay and benefits package to retain the best warfighters to execute  the national defense strategy. However, DOD also noted the department  must ensure that its military personnel compensation requirements— which comprise about one-third of the current military budget—do not  crowd out investments in the readiness and modernization portions of the  budget. In fiscal year 2008 Congress authorized a consolidation of the  existing 60 S&I pay authorities (legacy authorities) into 8 authorities  (consolidated authorities) based on broad categories of personnel and  activities. DOD is in the process of implementing the consolidated  authorities by revising existing pay programs in conformance with the new  authorities. Implementation of this change must be complete by January  28, 2018. For additional information on the status of DOD’s  implementation efforts, see appendix I.
We have issued multiple products and made many recommendations  related to DOD’s efforts to effectively manage its military personnel  compensation incentives. Our March 2011 report on duplication and  opportunities for cost savings in government programs found that DOD  and Congress have expanded military pay and benefits using a  piecemeal approach rather than a total compensation approach that could  help to balance the appropriateness, affordability, and sustainability of  personnel-related costs. The report referenced our past  recommendations, including a 2007 recommendation that DOD should  establish a clear compensation strategy that includes performance  measures to evaluate the efficiency of compensation in meeting recruiting  and retention goals. DOD has taken some steps to evaluate the  effectiveness of specific pay and benefits included in military  compensation but has not comprehensively assessed the effectiveness of  its mix of pays and benefits and used the results to develop a  compensation strategy as we recommended. Most recently, in November  2015, we reported on the extent to which the Office of the Secretary of  Defense, Department of the Army, and the Army National Guard have  conducted their oversight responsibilities of the Army National Guard’s  financial incentives programs. We found that, although Department of  the Army and National Guard regulations require evaluations of the  effectiveness of the Army National Guard financial incentives programs— including S&I pays such as enlistment and reenlistment bonuses—the  Army and the Army National Guard had not evaluated and documented  the effectiveness of the programs. Further, we reported that DOD did not  include Reserve Component obligation data in required reports that are  used to help ensure that DOD is using the most efficient and cost- effective processes in the recruitment of new personnel. On the basis of  our findings, we recommended that the Secretary of the Army, in  conjunction with the Director, Army National Guard, exercise their  oversight responsibilities by evaluating and documenting the  effectiveness of the Army National Guard’s incentives program in meeting  its goals. In addition, we recommended that DOD enforce its requirement  for the Reserve Components to submit information on the amounts of  incentives obligated and incorporate the required information in the  recruiting resources reports. DOD concurred with the recommendations,  and has taken action to implement the second recommendation. For  additional information on our prior work on military personnel  compensation incentives, see a list of related products at the end of this  report.
A Senate Armed Services Committee report accompanying a bill for the  National Defense Authorization Act for Fiscal Year 2016 includes a  provision for us to review the effectiveness of DOD’s S&I pay programs.  This report assesses (1) trends in DOD obligations for S&I pay programs  for fiscal years 2005 through 2015, and the extent to which DOD reports  such obligations department-wide; and (2) the extent to which the military  services applied key principles of effective human capital management in  the design of S&I pay programs for recruitment and retention of  servicemembers in selected high-skill occupations for fiscal years 2010  through 2015.
To address our first objective, we obtained and analyzed data on S&I pay  programs from the annual budget justification materials published by  DOD and the military services. We analyzed obligations for S&I pays from  their active and Reserve Component military personnel accounts for fiscal  years 2005 through 2015. We selected this timeframe to enable us to  evaluate trends over time, and fiscal year 2015 was the most recent year of available obligations data at the time of our review. To assess the  reliability of the data on S&I pays, we assessed the completeness of the  data and compared the data against other data sources. As a result of our  assessment and discussions with DOD officials, we determined that  obligation data for active component S&I pay programs were sufficiently  reliable. DOD’s Financial Management Regulation, which provides a  uniform budget and accounting classification that is to be used for  preparing budget estimates, requires the Reserve Components to report  obligations for certain recruiting and retention bonuses but does not  require the services to report all Reserve Component S&I obligation data  separately from other types of compensation. As such, we requested data  on Reserve Component obligations for S&I pay programs from each of  the services. We determined that obligation data for Reserve Component  S&I pay programs—other than those for the Marine Corps Reserve— were unreliable due to incompleteness or inconsistency, as discussed  later in this report. Further, we examined DOD policy, key statutes,  accounting standards, and federal internal control standards for  developing and reporting cost information to determine the extent to  which they were followed by DOD when reporting on S&I pay  obligations.
To address our second objective, we selected a non-generalizable  sample of S&I pay programs associated with high-skill occupations from  across the military services to review in greater detail as case studies. In  selecting the case studies, we sought to include (1) a mix of S&I pay  programs associated with an occupation-specific pay authority and S&I  pay programs that apply authorities that are available across occupation  types; (2) programs containing pays in varying stages of implementation;  and (3) at least one emerging occupation. We selected the S&I pay  programs associated with the following three occupations, identified as  “high-skill” in the congressional provision in Senate Report 114-49, for  focused study: aviation, cybersecurity, and nuclear propulsion. These  occupations were chosen because each service uses different  approaches to offering S&I pays to aviators; cybersecurity is an emerging  occupation for which there are no designated S&I pays; and while the  nuclear propulsion occupation is limited to one military service, it is a  relatively high-cost S&I pay program. While the findings of the case  studies cannot be generalized to all S&I pay programs across DOD, they  reflect a range of characteristics of such programs and are associated  with skills and missions deemed critical by the department. To identify  criteria for evaluating the effectiveness of S&I pay programs designed to  recruit and retain military servicemembers, we reviewed a compilation of  GAO’s body of work on human capital management and DOD’s human  capital guidance. Using these sources, we selected seven key principles  of effective human capital management that can be applied to assess the  effectiveness of the services’ S&I pay programs’ design. We applied  these seven key principles to DOD and service practices for designing  their S&I pay programs associated with the three case study occupations  we selected. In addition to using the key principles, we also compared  aspects of DOD’s S&I pay program guidance with federal internal control  standards that emphasize the importance of establishing clear and  consistent agency objectives. This report provides the results of our  three case studies, and appendixes II through IV provide additional  information and analysis for each case study. For additional details on our  scope and methodology, see appendix V.
We conducted this performance audit from July 2015 to February 2017 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
subsections: section_title: Purpose and Benefits of S&I Pays
paragraphs: The Department of Defense’s military compensation package includes a  collection of pays and benefits used to retain and recruit active duty  servicemembers, including basic pay, allowances for housing and  subsistence, and federal tax advantages. In addition, servicemembers  can be provided with compensation for specific duties and occupations or  conditions of service in the form of S&I pays. As we reported in 2011,  DOD and the services are authorized to offer various S&I pays that  provide targeted monetary incentives to specific groups of personnel to  influence the numbers of personnel in specific situations in which less  costly methods have proven inadequate or impractical.
section_title: S&I Pay Programs Used to Help Meet Staffing Targets for Three High- Skill Occupations
paragraphs: The services use a variety of S&I pay programs to help meet staffing  targets for the three high-skill occupations we selected as case studies for  this review (see table 1). These S&I pay programs are generally used to  improve accession and retention of servicemembers. We discuss the  services’ use of S&I pays to support these occupations in more detail in  appendixes II – IV.
section_title: DOD’s Effort to Consolidate S&I Pay Categories
paragraphs: In its 2008 Report of The Tenth Quadrennial Review of Military  Compensation (QRMC), DOD recommended consolidating the more than  60 S&I pays into 8 broad categories in order to increase the pay system’s  flexibility and effectiveness as a force management tool. These  categories include enlisted force management pay, officer force  management pay, nuclear officer force management pay, aviation officer  force management pay, health professions officer force management pay,  hazardous duty pay, assignment or special duty pay, and skill incentive or  proficiency pay. Prior to the release of DOD’s Tenth QRMC in 2008,  Congress authorized the consolidation of the 60 legacy authorities into 8  authorities based on the categories. This change is required to be  completed by January 28, 2018. In addition to the 8 consolidated  authorities, existing authorities for the 15-year career status bonus and  the critical skills retention bonus were retained. According to DOD, as of  October 2016, 5 of the 8 consolidated special pay authorities had been  fully or partially implemented by revising and transitioning existing S&I  pay programs in conformance with the new consolidated authorities.  According to a DOD official, implementation of the remaining 3  consolidated authorities is expected to be completed by October 2017. In  June 2011 we recommended that DOD monitor its efforts in consolidating  S&I pay programs under its new authorities to determine whether  consolidation resulted in greater flexibility. DOD officials had previously  stated that they would not be able to assess whether the consolidation  resulted in greater flexibility until the consolidation is complete. See  appendix I for additional details on DOD’s implementation of the  consolidation effort.
section_title: Roles and Responsibilities for the S&I Pay Program
paragraphs: Within the Office of the Secretary of Defense, the Deputy Under  Secretary of Defense for Personnel and Readiness is responsible for  DOD personnel policy and total force management. The Principal Deputy  Under Secretary of Defense for Personnel and Readiness, under the  Under Secretary of Defense for Personnel and Readiness, is responsible  for providing overall guidance in the administration of the enlistment  bonus, accession bonus for new officers in critical skills, selective  reenlistment bonus, and critical skills retention bonus programs. It is DOD  policy that the military services use enlistment, accession, reenlistment,  and retention bonuses as incentives in meeting personnel requirements.  The intent of bonuses is to attract and retain servicemembers in specific  skills or career fields in which less costly methods have proven  inadequate or impractical. According to policy, the military services must  exercise this authority in the most cost-effective manner, considering  bonus employment in relation to overall skill, training, and utilization  requirements. Military skills selected for the award of enlistment,  accession, reenlistment, and/or retention bonuses must be essential to  the accomplishment of defense missions.
section_title: Obligations for Special and Incentive Pays for Active Duty Personnel Have Decreased since Fiscal Year 2005, but DOD Does Not Report Comparable Data for Reserve Component Personnel
paragraphs: DOD has experienced an overall decrease in active duty S&I pay  obligations since fiscal year 2005, but it does not report comparable data  on Reserve Component S&I pay programs. Our analysis of DOD’s  annual budget data shows that the obligations of S&I pays for active duty  military personnel, after accounting for inflation, decreased by 42 percent  from fiscal year 2005 through fiscal year 2015, from $5.8 billion to $3.4  billion. The 42 percent S&I pay obligation decrease from fiscal years  2005 through 2015 also coincided with a 12 percent decline in active duty  military average strengths. DOD officials attributed the decrease to a  combination of reduced overseas contingency operations, a reduced  annual average strength of the force, and a favorable recruiting climate.  DOD does not report complete information on S&I pay obligations for the  Reserve Components, in part because DOD’s Reserve Components are  not required to separately collect and report all S&I pay obligations in  annual budget materials provided to Congress, thus limiting the extent to  which we could identify and evaluate changes occurring within Reserve  Components’ S&I pay programs.
subsections: section_title: Obligations for Special and Incentive Pays for Active Duty Personnel Decreased from Fiscal Years 2005 through 2015
paragraphs: Our analysis of DOD budget data shows that from fiscal year 2005  through fiscal year 2015 the department’s active duty S&I pay obligations  decreased by 42 percent, from $5.8 billion to $3.4 billion (see figure 1). In  comparison, during the same time, the total active duty military personnel  obligations decreased by 10 percent—largely due to end strength  reductions. Obligations for active duty S&I pays increased from $5.8  billion in fiscal year 2005 to $7.1 billion in fiscal year 2008 (by 22 percent),  largely due to the increased use of S&I pays by the Army and the Marine  Corps. Service officials attributed the increase to the Army and Marine  Corps Grow-the-Force initiative. After peaking in 2008, active duty S&I  pay obligations declined to $3.4 billion in fiscal year 2015. DOD officials  attributed this decrease to a combination of reduced overseas  contingency operations, a drawdown in forces, and an economic  recession that led to a more favorable recruiting climate and less need to  offer S&I pays. As shown in figure 1, the 42 percent S&I pay obligation  decrease from fiscal years 2005 through 2015 also coincided with a 12  percent decline in active duty military average strengths, demonstrating  the services’ ability to adjust certain S&I pays in response to changing  economic conditions and labor market dynamics, as well as trends in the  number of military personnel.
section_title: Trends Varied across S&I Pay Categories
paragraphs: From fiscal years 2005 through 2015, obligations for S&I pays varied  across the pay categories under which legacy S&I pays are being  consolidated (see figure 2). Specifically, since the peak in fiscal year  2008, obligations in all but three consolidated S&I pay categories  decreased. For example, obligations for hazardous duty pay, which  consolidated legacy pays that traditionally operated as entitlement  authority and was paid to servicemembers performing hazardous duties  enumerated in statute, peaked in fiscal year 2008 to $1.2 billion due to  the operational tempo and steadily declined as a result of the drawdown  in forces to $259 million in fiscal year 2015 (by 79 percent). Similarly,  the general bonus pay for enlisted members, which accounted for 29  percent of the total obligations for S&I pays from fiscal years 2005  through 2015, grew from $1.7 billion in fiscal year 2005 to $2.5 billion in  fiscal year 2008 (by 47 percent) and subsequently declined to $727  million in fiscal year 2015 (by 71 percent). Service officials attributed the  increase to the Army and Marine Corps Grow-the-Force initiative, which  resulted in an increased use of enlistment and retention bonuses, and  attributed the subsequent decrease to the drawdown in forces and the  economic recession. Service officials noted that while obligations and the  number of Selective Reenlistment Bonus (SRB) contracts have declined  overall since fiscal year 2008, for certain high demand specialties, such  as special operations, cyber, and nuclear personnel, obligations and the  numbers of bonus contracts have increased due to the need to retain  these personnel.
section_title: DOD Could Not Provide Complete Obligation Data on Special and Incentive Pays for All Reserve Components
paragraphs: The Reserve Components did not consistently collect and report  complete obligation data for each S&I pay program. Specifically, the  Reserve Components’ budget justification materials did not contain  obligation data for S&I pays provided to Guard and reserve members to  the same level of detail as the active component, and the Marine Corps  Reserve was the only Reserve Component able to provide total  obligations for S&I pays. Depending on the type of duty they are  performing, Reserve Component members may be eligible for special and  incentive pays, such as aviation career incentive pay, foreign language  proficiency pay, special pays for health professionals, diving duty pay,  hazardous duty pays, and others. Reservists are generally eligible for  special and incentive pays during active duty training under the same  conditions as active component personnel. Typically, they may receive a  pro-rated portion of the full monthly amount corresponding to the number  of days served. Reserve component members may also be eligible for  special and incentive pays during inactive duty for training, and they  typically receive such compensation at a rate proportional to the amount  of inactive duty compensation they receive (i.e., one-thirtieth of the  monthly rate for each unit training assembly).
Our review of the services’ annual budget materials found that the  services did not report Reserve Component S&I pay obligations in their  annual budget materials in a manner consistent with the active  component. This was because DOD’s Financial Management  Regulation, which provides guidance for a uniform budget and  accounting classification that is to be used for preparing budget  estimates, including the budget justification materials we reviewed, does  not require the services to do so. For the active military personnel budget  materials, the regulation contains guidance and a framework that require  the services to separately report obligations for each S&I pay. In contrast,  the regulation requires the Reserve Components to list obligations for  certain bonuses but does not require them to report obligations for all S&I  pays separately; instead, it specifies that many Reserve Component S&I  pays be grouped together with other military personnel obligations under  a single budget activity. For example, in accordance with DOD  guidance, all the Reserve Components reported obligations for  accession, reenlistment, and enlistment bonuses for their administration  and support personnel. In addition to the bonuses, the Navy Reserve  separately identified obligations for aviation continuation pay and foreign  language proficiency pay in its annual budget materials for its  administration and support personnel. The Air Force Reserve also  separately identified obligations for foreign language proficiency pay in its  annual budget materials for its administration and support personnel.  However, for many of the other S&I pays, the services grouped S&I pay  obligations with other military personnel obligations under a single budget  activity, as is allowed under the regulation.
We requested that the Reserve Components provide us with S&I pay  obligation data that were not contained in annual budget materials, but  the Marine Corps reserve was the only Reserve Component that was  able to provide obligations for each S&I pay for all the years included in  our review (fiscal years 2005 through 2015). Army, Navy, and Air Force  officials told us that their systems were not originally designed to collect  and report obligations for individual S&I pays for the Reserve  Components. As a result, the Army and the Air Force could not provide  additional data. The Navy provided some additional data, but we  determined that these data were not reliable because of inconsistencies  and incompleteness. For example, the Navy could not provide obligation  data for all S&I pays—instead providing execution data. Further,  according to Navy officials, certain S&I pays are not consistently  categorized in their system, making it difficult to identify cost trends in  these S&I pays over time. Further, these services could not provide the  portion of their Reserve Components’ military personnel budgets that S&I  pay obligations represent. S&I pay obligations for the Marine Corps  Reserve accounted for roughly 2 percent ($172 million) of its total military  personnel budget on average from fiscal years 2005 through 2015.  However, this percentage may not be representative of all the services’  Reserve Components, as the services’ reliance on S&I pays can vary, as  we observed variability among the active components. Similarly to active  duty S&I pay obligations, Marine Corps Reserve data also indicated that  obligations peaked in fiscal year 2009 due in part to an increased offering  of new enlistment bonuses. According to Marine Corps officials, this  increase helped to support recruitment and retention of additional Marines  required to sustain two major theater combat operations as well as to  provide forces to Special Operations, Cyberspace Operations, and  various headquarters staffs.
The Office of the Under Secretary of Defense (Comptroller) has  established budgetary information as a priority area for DOD’s Financial  Improvement and Audit Readiness Plan. The Comptroller’s memorandum  establishing these priorities states that, because budgetary information is  used widely and regularly for management, DOD will place the highest  priority on improving its budgetary information and processes. In  support of DOD’s policy to use the most efficient and cost-effective  processes in the military services’ recruitment of new personnel, DOD  components are required to track and report all resource information  applicable to enlisted members and officers who join the military services,  including recruitment incentives. Furthermore, according to key statutes  and accounting standards, agencies should develop and report cost  information. Besides demonstrating financial accountability in the use of  taxpayer dollars by showing the full cost of federal programs, the cost  information can be used by the Congress and federal executives in  making decisions about allocating federal resources, authorizing and  modifying programs, and evaluating program performance. The cost  information can also be used by program managers in making managerial  decisions to improve operating economy and efficiency.
According to the Office of the Under Secretary of Defense (Comptroller),  there is no requirement to collect and report obligations separately for  each of the Reserve Component’s S&I pays. For example, guidance such  as DOD’s Financial Management Regulation for DOD’s annual budget  justification materials does not require the Reserve Components to collect  and report such data. As a result, with the exception of the Marine Corps  Reserve, the Reserve Components have not collected and reported S&I  pay obligations separately. Furthermore, officials noted that there is no  requirement to collect this information because the Reserve Component  personnel generally accrue S&I pays at a much lower rate than do active  duty personnel. DOD officials told us that the services would likely need  to make programming changes to various financial and personnel systems in order to separately track and report Reserve Component S&I  pay obligations in their budget materials. However, DOD officials were  unable to provide estimates of the costs associated with making such  changes, and they told us that DOD has not explored other approaches  that may be cost-effective to collect and report such information.  According to federal internal control standards, agencies should have  financial data to determine whether they are meeting their goals for  accountability for the effective and efficient use of resources, which would  apply to DOD in gauging the cost-effectiveness of changes to its financial  and personnel systems for tracking and reporting S&I pay obligations for  reservists. Although S&I pay amounts provided to Reserve Component  servicemembers are most likely a fraction of what is paid to the active  component servicemembers, the total amounts could add to hundreds of  millions of dollars over time, on the basis of data provided by the Marine  Corps. Furthermore, according to Marine Corps officials, analysts were  able to obtain data on S&I obligations for the fiscal years under our review  using their financial pay systems without making any changes to these  systems. Until DOD explores cost-effective approaches to collect and  report S&I pay program data for the Reserve Components, DOD may not  know the full cost of its S&I pay programs, may not be able to make fully  informed decisions about resource allocation, and may not be able to  evaluate program performance over time.
section_title: The Military Services Varied in Their Application of Key Principles of Effective Human Capital Management in S&I Pay Programs for Selected Occupations and Have Not Taken Steps to Fully Ensure Effectiveness in Program Design
paragraphs: The military services have largely applied key principles of effective  human capital management in using S&I pay programs to retain  servicemembers within our selected case study occupations (nuclear  propulsion, aviation, and cybersecurity). However, the consistency with  which the services applied these principles varied by service and by  occupation. DOD and the services have not taken steps to fully ensure  consistent application of principles of human capital management in some  S&I pay programs for selected occupations and thereby ensure  effectiveness in the programs’ design.
subsections: section_title: The Military Services Largely Applied Key Principles of Human Capital Management in S&I Pay Programs, but Consistency Varied across the Services and Selected Occupations
paragraphs: Our review found that the military services largely applied key principles  of effective human capital management in selected S&I pay programs.  However, the consistency with which they applied the principles varied  across the services and across selected nuclear, aviation, and  cybersecurity occupations. In our March 2002 report on strategic human  capital management, we stated that making targeted investments in  employees is a critical success factor associated with acquiring,  developing, and retaining talent. Our report noted that, in making such  investments, agencies must consider competing demands and limited  resources and must balance and prioritize those factors. Similarly, in its  Eleventh QRMC, DOD outlined a number of “core elements” for ensuring  that investments in S&I pay strategies are cost-effective and optimize  limited resources. On the basis of our prior work and the  recommendations from DOD’s QRMC, we selected seven key principles  of human capital management that can be applied to assess whether the  services’ S&I pay programs are designed to ensure their effectiveness.  These seven key principles of human capital management include,  among other things, decision-making about human capital investment that  is based largely on the expected improvement of agency results and is  implemented in a manner that fosters top talent; consideration of  replacement costs when deciding whether to invest in recruitment and  retention programs; and assessments of civilian supply, demand, and  wages that inform updates to agency plans as needed. Figure 3 lists the  seven key principles and our assessment of the extent to which they were  addressed in the military services’ S&I pay programs for each of our three  case study occupations.
Based on our analysis of military service policies and guidance, annual  S&I pay program proposals submitted to the Office of the Secretary of  Defense (Personnel and Readiness), and interviews with officials, we  determined that the services largely applied key human capital principles  to the S&I pay programs for three selected occupations (nuclear  propulsion, aviation, and cybersecurity). The extent to which the  principles were applied varied in consistency by service and by  occupation.
subsections: section_title: Nuclear Propulsion Occupation
paragraphs: The Navy’s nuclear propulsion program demonstrated consistent  application of all seven principles throughout the use of S&I pays for both  officers and enlisted personnel. We found that the Navy uses a four-part  approach to planning, implementing, and monitoring its S&I pay programs  for nuclear-trained personnel to ensure effectiveness in nuclear personnel  recruitment and retention. Together, these practices align with the  principles of effective human capital management. For example, the  Navy’s approach addresses key principle #2 by considering the high  replacement costs of its nuclear personnel—up to $986,000 per trainee— in justifying a strategy that prioritizes investment in retention initiatives  over new accessions or recruits. In addition, the Navy sets optimal bonus  amounts for nuclear officers and enlisted personnel by monitoring civilian  nuclear salaries and employment demand (key principle #7), studying the  effects of changes to bonus amounts on retention behavior (key principle  #5), and making changes to bonus amounts as appropriate (key principle  #4). Moreover, the Navy makes informed decisions about its investments  in S&I pay programs for nuclear personnel by using both quantitative and  qualitative models for predicting numbers of personnel and retention rates  as accurately as possible (key principle #6). Finally, Navy officials perform  periodic personnel audits to ensure that recipients of its nuclear-related  S&I pays are continuing to meet eligibility criteria, thereby helping to  ensure that only qualified members are retained (key principle #3).
section_title: Aviation Occupation
paragraphs: We found that the Navy fully addressed each of the seven key principles  of effective human capital management in managing its program to retain  pilots. The Army, the Marine Corps, and the Air Force largely applied the  principles, but we found that the extent to which the services addressed  the key principles varied (see figure 3). For example, all of the services  identified opportunities to improve their S&I pay programs, and  incorporate these changes into the next planning cycle (key principle #6).  The Navy and the Marine Corps addressed key principle #6 for their  Aviation Continuation Pay (ACP) program by (1) offering different pay  amounts to pilots by specific platform (the model of aircraft a pilot  operates) and (2) reducing or suspending the pay when staffing goals had  been achieved. In contrast, the Air Force offered ACP to broad categories  of pilots across multiple platforms, and it generally offered the maximum  amount allowed by law. Only the Navy and Marine Corps fully  incorporated quality measures into decisions to offer S&I pays to pilots  (key principle #3). For example, the Navy incorporated quality into its  ACP program by targeting the bonus to pilots on track for Department  Head positions and canceling bonus contracts for pilots who were not  promoted to Department Head. In contrast, the Air Force considered the  expected positive effect on retention as a factor for offering ACP, but did  not specifically consider the relative quality of pilots within a targeted  community as a factor for awarding an ACP contract.
In addition, the services varied in how they incorporated a review of the  civilian aviation sector in their decisions to offer retention bonuses to  pilots (key principle #7). For example, the Army has not reviewed or  considered commercial aviation in the context of its S&I pay program for  pilots—largely because the Army provided ACP only to special operations  pilots, and the skillset required for this mission does not have a clear  civilian-sector equivalent. The Navy fully addressed this principle by  specifically identifying comparable salary levels for commercial aviation  pilots. The Air Force and the Marine Corps partially addressed this  principle by considering the relationship between the compensation  offered to their pilots and to commercial aviation pilots, but they did not  specifically identify comparable salary levels and use them to determine  retention bonus amounts. In addition, the services reached different  conclusions about the extent to which the civilian aviation sector  competes with the military for pilots. Specifically, the Navy stated that  airline compensation would have to increase in order to have a significant  impact on the retention of Navy pilots, and the Marine Corps reported that  the potential increase in hiring by commercial airlines did not warrant the  offering of ACP bonuses in fiscal year 2013. In contrast, the Air Force’s  reports endorsing aviator retention bonuses stated that civilian aviation  compensation factored into the Air Force’s decision to keep bonus  amounts at the statutory limit of $25,000 per year. In February 2014, we  reported that commercial aviation compensation decreased by almost 10  percent in constant dollars from 2000 to 2012. In July 2016, DOD  reported to Congress on aviation-related S&I pays. DOD’s report stated  that the military has experienced high levels of pilot retention as a result  of decreased civilian airline pilot salaries, significantly reduced civilian  airline pilot hiring, increased military pay and benefits, and an increased  sense of duty and patriotism after the events of September 11, 2001.  However, the report added that the department anticipated that increased  hiring by commercial airlines over the ensuing 5 to 7 years could  necessitate increasing bonus amounts from $25,000 per year to a range  of $38,500 to $62,500 per year. As such, DOD’s report requested that  Congress consider increasing the rates of Aviation Career Incentive Pay,  and specifically increase the maximum authorized level of Aviation  Continuation Pay from $25,000 per year to $35,000 per year.
section_title: Cybersecurity Occupation
paragraphs: Similar to our findings with regard to aviation-related S&I pay programs,  we found that the services are also not consistently applying the  principles of effective human capital management in implementing S&I  pay programs for their cybersecurity personnel. As shown in figure 3  above, our assessment found that although none of the services fully  addressed all seven principles for the cybersecurity occupation, they all  addressed each principle at least partially. Each service consistently  addressed three of the seven principles, including having clear and  consistently applied criteria (key principle #1), considering the  replacement cost of personnel (key principle #2), and identifying  opportunities for improvement and incorporating them in planning (key  principle #6). For example, the Army, the Navy, the Air Force and the  Marine Corps have all addressed several principles through their  development of criteria to guide their decisions to invest in SRBs for  cybersecurity personnel. Examples of those criteria include growing  requirements; personnel replacement costs (including training); and  mission criticality of the skill set. Service officials stated that they  considered replacement costs and noted that replacing these personnel  would be more costly than offering an SRB. According to service officials,  depending on the military occupational specialty, after initial military  training, specialized training may take from 8 months to 3 years. Service  officials cited costs to train their cyberforces as ranging from about $23,000 to over $500,000. We found that the Navy and the Marine Corps  have taken steps to implement their S&I pay programs in a way that  would help retain the most valuable personnel in the cybersecurity  occupation in terms of top performance (key principle #3). For example, in  order to retain the most qualified personnel, in fiscal year 2012 the Marine  Corps began to use a rating system that would help decision-makers to  differentiate Marines’ performance during the reenlistment process.  According to Army and Air Force officials, the purpose of the SRB  program is to retain adequate numbers of qualified enlisted personnel  serving in critical skills, and the bonus generally was not designed to  target top performers. Further, we found that only the Army has tailored  its SRB program to target cybersecurity personnel within non-designated  cyber career fields (key principle #4). Specifically, the Army further targets  personnel in career fields by location and skill, which enables it to target  cybersecurity personnel in non-designated cyber career fields. The  Marine Corps and the Air Force do not target cybersecurity personnel in  non-designated cyber career fields. According to Navy officials, they do  not have designated cybersecurity career fields and do not directly target  cybersecurity personnel when offering bonuses. In addition, the services  varied in how they incorporated a review of the civilian cybersecurity  occupation in their decisions to offer S&I pays to cybersecurity personnel  (key principle #7). For example, as part of determining the amount to  offer, the Army and the Navy considered the wage of civilians in cyber- related career fields. The Navy noted in its justification for offering  selective reenlistment bonuses that sailors within cyber-related career  fields could qualify for positions in the civilian workforce with salaries  starting at $90,000 with a $5,000 to $10,000 sign-on bonus. According to  Marine Corps and Air Force officials, the Marine Corps and the Air Force  did not consider civilian wages in cyber-related career fields when  determining whether to offer a retention bonus.
section_title: DOD And the Military Services Did Not Take Steps to Fully Ensure the Effectiveness of S&I Pay Programs’ Design
paragraphs: As noted above, the military services largely incorporated key principles  of effective human capital management into the S&I pay programs used  for nuclear propulsion, aviation, and cybersecurity occupations. However,  our review found that DOD and the services have not taken steps to fully  ensure consistent application of the principles in some S&I pay programs  for these selected occupations and to ensure effective program design.  First, although DOD reports have stated that S&I pays are used  efficiently, we found that DOD has not taken steps to support this  conclusion. Specifically, DOD has not reviewed whether its S&I pay  programs have incorporated the key principles of human capital  management that we identified, or whether they have used resources  efficiently because DOD officials told us that the services and different  occupations have unique needs that make comparison and assessment  difficult. DOD guidance pertaining to enumerated S&I pay programs  generally requires the Assistant Secretary of Defense for Personnel and  Readiness, using delegated authority, to monitor and propose revisions to  bonus and special pay programs. For example, DOD Directive 1304.21  directs the Principal Deputy Under Secretary of Defense for Personnel  and Readiness, acting under the Under Secretary of Defense for  Personnel and Readiness, to monitor bonus programs of the military  services and recommend measures required to attain the most efficient  use of resources devoted to programs on enlistment bonuses, accession  bonuses for new officers in critical skills, selective reenlistment bonuses,  and critical skills retention bonuses for active members. Consistent with  the policy, the Office of the Under Secretary of Defense for Personnel and  Readiness monitors the services’ S&I pay programs, including bonuses.  However, on the basis of interviews with DOD officials, we found that  DOD has not systematically included in its monitoring efforts a review of  whether S&I pay programs have used resources efficiently, nor has it  developed measures required to attain efficient use of S&I pay program  resources. The officials stated that DOD has contracted with a research  organization to develop a quantitative modeling tool that would enable the  services to set cost-efficient bonus amounts. Such a tool may help the  services to consistently apply human capital management principle #3 in  instances where they are not already doing so in their S&I pay programs  for aviation and cybersecurity (see figure 3). This principle calls for  investment decisions to be based on expected improvement in agency  results and implemented in a manner that fosters top talent. Depending  on the inputs to the modeling tool, once developed, it could also help the  Army, the Marine Corps, and the Air Force to address principle #7 by  assessing civilian supply, demand, and wages and by updating their  plans as needed for their S&I pay programs. According to DOD officials,  however, progress on this effort has been slowed by competing  priorities—that is, by the department’s focus on adjusting the military  retirement system. In the absence of measures for ensuring efficiency in  S&I pay programs, DOD and the services generally assess their S&I pay  programs’ effectiveness by the extent to which they achieve desired  staffing targets. However, this approach does not ensure that S&I pay  programs are using resources in the most efficient manner, as DOD  guidance requires. Until DOD reviews whether its S&I pay programs have  incorporated the key principles of human capital management that we  identified, reviews whether the programs have used resources efficiently,  and prioritizes and completes the establishment of measures for efficient  use of resources, DOD and the services may lack assurance that S&I pay  programs are effective and that resources are optimized for the greatest  return on investment.
Secondly, on the basis of our interviews with DOD officials, we found that  the department has not assessed the extent to which its non-monetary  incentives could result in the retention of personnel at a lower cost than  S&I pays and with equal or better effectiveness. An assessment of this  kind would help the services to consistently apply human capital  principles #4 and #5 in its cybersecurity S&I pay programs (see figure 3).  Specifically, an assessment of non-monetary incentives would help  ensure that approaches are tailored to meet the services’ needs by  identifying and evaluating unique staffing issues, and by collecting and  reviewing historical retention data to evaluate the effects and  performance of S&I pay programs. In our case study review of S&I pay  programs associated with the nuclear propulsion program, Navy officials  told us that changes to S&I pays provide only short-term solutions when  retention shortfalls are caused by servicemembers’ quality-of-life  concerns about things like deployment lengths and geographic instability.  As a result, Navy officials told us that they use a variety of non-monetary  incentives to complement S&I pays for retention purposes, including  guarantees for shore duty and graduate education opportunities. We  found that DOD and the services also take steps to understand what non- monetary incentives improve servicemember satisfaction and retention.  For example, through its periodic Status of Forces surveys, DOD collects  information from servicemembers on their satisfaction with non-monetary  incentives and their plans to leave or stay in the military, among other  things. In addition, DOD officials told us that the services collect feedback  from servicemembers who are separating to understand their reasons for  leaving. However, according to DOD officials, they have not taken steps  to routinely leverage existing feedback mechanisms and evaluate  whether these non-monetary approaches can be expanded as less costly  alternatives to address retention challenges, because they believe that  S&I pay programs may be more efficient than non-monetary incentives.  Without conducting routine assessments of the impact of non-monetary  incentive approaches on retention behavior and on the necessary levels  of S&I pays, DOD and the services do not know whether they are using  the most efficient and effective combination of incentives for achieving  retention objectives at the lowest possible cost.
Third, with regard to key principle #3, department-level guidance on S&I  pay programs does not explicitly incorporate personnel performance into  eligibility criteria or retention decisions as a way to foster top talent and  improve program results. For example, DOD guidance we reviewed on  critical skills retention bonuses does not include explicit provisions  addressing personnel performance that would ensure that monetary  incentives are targeted to top performers. At the service-level, some but  not all S&I pay programs for the three case study occupations included  direction for targeting pays to personnel based on their levels of  performance, consistent with principle #3. For example, the Navy  reported that they implement their program for awarding aviation retention  bonuses to pilots to explicitly connect the bonus contract to a pilot’s  successful promotion to a department head position. If the pilot fails to be  promoted, the bonus contract is canceled. In addition, the Navy’s  instruction on its nuclear officer incentive pay program considers  performance by excluding servicemembers who are undergoing  disciplinary actions, who failed to maintain nuclear qualifications, or who  failed to be selected for promotions, among other things. DOD officials  told us that S&I pay programs were not designed to target top performers  and that the services use other means to recognize performance, such as  promotions. Federal internal control standards emphasize the importance  of establishing clear and consistent agency objectives, which would apply  to DOD’s determination about incorporating personnel performance into  eligibility criteria or retention decisions for its S&I pay programs. Until  the services clarify existing guidance for S&I pay programs regarding the  extent to which personnel performance should be incorporated into  retention decisions where appropriate, consistent with principle #3, the  application and understanding of the guidance may be inconsistent  among service officials responsible for managing S&I pay programs.
Finally, with regard to key principle #4, which calls for tailoring  approaches for meeting organizational needs by evaluating unique  staffing issues, we found that the military services have awarded SRBs to  cybersecurity personnel in accordance with their broader military  occupational specialty rather than tailoring the awards toward the skill  sets within those specialties that have specific or unique staffing  shortfalls. According to information received from service officials, the  services have some cybersecurity specific career fields; however, each  military service continues to assign cybersecurity personnel to military  occupational specialties that include other types of personnel skill sets,  such as intelligence or information technology. However, the Army  recently began to tailor its SRB program to target cybersecurity  personnel. The Navy, the Marine Corps, and the Air Force—unlike the  Army—have not imposed other conditions by which to direct SRBs to  personnel with specific cybersecurity skill sets within a broader military  occupational specialty. According to service officials, cybersecurity is an  emerging occupation, and the services have not yet assigned all of their  cybersecurity personnel to cybersecurity-designated career fields. Marine  Corps officials told us, for example, that cybersecurity within the enlisted  community is often a secondary skill set associated with other primary  specialties. According to DOD officials, the Marine Corps has the ability to  target SRBs to a secondary skill; however according to Marine Corps  officials, the Marine Corps has not begun to do this for the cybersecurity  community. As a result, these services have not awarded SRBs to  personnel with cybersecurity skill sets without also awarding it to other  skill sets within the same occupational specialty that may not have the  same staffing needs. DOD’s policy on the enlisted bonus program states  that the SRB may be used to obtain the reenlistment or voluntary  extension of an enlistment in exchange for a member’s agreement to  serve for a specified period in at least one of the following reenlistment or  extension categories: a designated military skill, career field, unit, or  grade; or to meet some other condition or conditions imposed by the  Secretary of the Military Department concerned. Until the services  develop approaches to directly target SRBs to personnel with  cybersecurity skill sets, they may award SRBs to specialties that include  non-cybersecurity personnel for whom the SRB is unneeded. Further,  without consistently targeting their SRBs toward specific skill sets, the  services may not be using the SRBs as cost-effectively as possible.
section_title: Conclusions
paragraphs: Strategic management of S&I pay programs is important to support  DOD’s ability to sustain its all-volunteer force, providing a suite of flexible  compensation approaches that can be used to address staffing issues  more efficiently than basic pay increases. In addition, the effective use of  S&I pay programs, like other components of military compensation, is  important for the efficient use of budgetary resources. As DOD officials  seek to efficiently manage the department’s budget, S&I pay programs  are likely to be a continued area in which to find efficiencies and cost  savings. However, without exploring cost-effective approaches to collect  and report complete obligation data for each S&I pay program for the  Reserve Components, DOD may not know the full cost of its S&I pay  programs, may not be able to make fully informed decisions about  resource allocation, and may not be able to evaluate program  performance over time. According to DOD officials, DOD has also not  reviewed the extent to which the services’ S&I pay programs incorporate  key principles of effective human capital management, or whether S&I  pay programs have used resources efficiently; nor has it prioritized and  completed the establishment of measures for ensuring the efficient use of  resources. Furthermore, the military services do not consistently apply  key human capital management principles to their S&I pay programs,  such as by using non-monetary incentives to retain personnel or  incorporating personnel performance into eligibility criteria or retention  decisions as a way to foster top talent and improve program results. In  addition, service officials told us that the military services have not  completely identified cyber workforces, thereby limiting their ability to  target S&I pays to critical specialties. Without addressing these issues,  DOD and the services may not be able to ensure that S&I pay programs  are effectively designed and that resources are optimized for the greatest  return on investment.
section_title: Recommendations for Executive Action
paragraphs: To facilitate DOD’s oversight of the military services’ S&I pay programs,  and to fully ensure the effectiveness of these programs, we recommend  that the Secretary of Defense take the following five actions:
Direct the Under Secretary of Defense (Comptroller), in coordination  with the military services, to explore cost-effective approaches to  collect and report S&I pay program data for the Reserve Components;
Direct the Under Secretary of Defense for Personnel and Readiness,  in coordination with the military services, to  review whether S&I pay programs have incorporated key  principles of effective human capital management and used  resources efficiently, and prioritize and complete the  establishment of measures for the efficient use of resources;  routinely assess the impact of non-monetary incentive approaches  on retention behavior and on the necessary levels of S&I pays;  clarify existing guidance for S&I pay programs regarding the  extent to which personnel performance should be incorporated  into retention decisions; and
Direct the Secretaries of the Military Departments to develop  approaches to directly target SRBs to cybersecurity skill sets.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for review and comment.  In its  written comments, reproduced in appendix VI, DOD concurred with three  of our recommendations and partially concurred with two. DOD also  provided technical comments on the draft report, which we incorporated  as appropriate.
In regard to our first recommendation—to explore cost-effective  approaches to collect and report S&I pay program data for the Reserve  Components—DOD concurred, adding that it will maintain its focus on the  recruiting and retention pays for both the active and reserve components,  and will continue to work with the Reserve Components to strengthen the  collection of the remaining special and incentive pays.  This action could  meet the intent of our recommendation if it results in DOD exploring  approaches to collect and report more complete and consistent data on  S&I pays for the Reserve Components.
In regard to our second recommendation— to review whether S&I pay  programs have incorporated key principles of effective human capital  management and used resources efficiently, and to prioritize and  complete the establishment of measures for the efficient use of  resources—DOD partially concurred, stating in its written comments that  DOD does use key principles of effective human capital management,  and although not articulated as GAO’s principles, share common goals  and results. We agree there are similarities and as noted in the report  DOD has demonstrated that it has used many of them. DOD stated that it  will support the opportunity to review and improve upon the principles and  methods to assess the efficiency of its S&I pay programs, and, where  appropriate, will incorporate these principles in future DOD policy  issuances and updates.  We continue to believe that fully implementing  the key principles of effective human capital management that we  identified would help DOD and the services to ensure that S&I pay  programs are effectively designed and that resources are optimized for  the greatest return on investment.
In regard to our third and fourth recommendations—to routinely assess  the impact of non-monetary incentive approaches on retention behavior  and on the necessary levels of S&I pays, and to clarify existing guidance  for S&I pay programs regarding the extent to which personnel  performance should be incorporated into retention decisions—DOD  concurred. In written comments, DOD provided examples of non- monetary incentives used by the services as alternatives to cash pays  and bonuses. DOD also noted that the department will clarify existing  guidance regarding the extent to which personnel performance will be  incorporated into retention decisions.
In regard to our fifth recommendation—to develop approaches to directly  target SRBs to cybersecurity skill sets—DOD partially concurred. In  written comments, DOD stated that the services are responsible for  developing their personnel requirements in order to meet individual  service needs, and that it has provided the services with the necessary  staffing tools to recruit and retain servicemembers in the cybersecurity  skill sets. DOD also noted that it is crucial for the services to retain their  flexibility to utilize these pays and benefits to address service-specific  shortfalls within their cybersecurity workforce and noted that it will assist  the services in growing and maintaining their cybersecurity workforce  through existing and future DOD policies. We recognize that the services  are responsible for their specific personnel requirements and that  flexibility is important.  However, as noted in our report, each military  service has assigned cybersecurity personnel to military occupational  specialties that include other types of personnel skill sets, such as  intelligence or information technology. As a result, because the services  offer SRBs by military occupational specialty, the services may award  SRBs to specialties that include non-cybersecurity personnel for whom  the SRB is unneeded.  Therefore, we continue to believe that there are  benefits to developing approaches to target cybersecurity personnel in  non-designated cybersecurity fields.
We are sending copies of this report to the appropriate congressional  committee, the Secretary of Defense, the Under Secretary of Defense for  Personnel and Readiness, the Secretaries of the Army, the Navy, and the  Air Force, and the Commandant of the Marine Corps. In addition, this  report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions regarding 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 major contributions to  this report are listed in appendix VII.
section_title: Appendix I: DOD’s Progress in Consolidating Special and Incentive Pays
paragraphs: In its September 2008 Tenth Quadrennial Review of Military  Compensation, the Department of Defense (DOD) reported that the basic  pay table provided limited flexibility to tailor the department’s human  capital approaches. DOD also noted that for many special pays, detailed  eligibility rules and precise payment amounts are set in statute and could  only be changed by congressional action. As a result, when staffing  needs or market conditions change, managers sometimes could not  adjust special and incentive (S&I) pay eligibility criteria or payment levels  in response to those changing circumstances. DOD recommended that  the more than 60 S&I pays be replaced with 8 broad categories. In  addition to these 8 categories, existing authorities for the 15-year career  status bonus and the critical skills retention bonus would be retained. The  review identified three benefits of consolidation: (1) increasing the  services’ flexibility to allocate resources to those areas that would most  effectively meet staffing needs; (2) decreasing the number of pays and  therefore reducing the administrative burden of managing over 60  different pays with different sets of rules and funding streams; and (3)  authorizing the services to allocate S&I pay to their highest priority  staffing needs which would allow the services to respond quickly to  changing staffing needs throughout the fiscal year. The National Defense  Authorization Act for Fiscal Year 2008 authorized the consolidation and  required DOD to complete the transition by January 28, 2018. DOD  began implementing the consolidation in 2008, and according to a DOD  official, expects the process to be completed by October 2017 (see figure  4).
According to DOD officials and our analysis of updated DOD guidance, as  of October 2016, DOD has at least partially transitioned 5 of the 8  consolidated S&I pay program authorities (see table 2). DOD has also  fully transitioned the authorities for the 2 legacy pays that were retained.  According to a DOD official, implementation of the remaining 3  consolidated authorities is expected to be completed by October 2017.
section_title: Appendix II: Case Study on Nuclear Propulsion Pays
subsections: section_title: Overview of the Nuclear Propulsion Occupation
paragraphs: Officers and enlisted personnel in the Navy’s nuclear propulsion program  are tasked with safely operating and maintaining the nuclear reactors that  power the Navy’s fleet of aircraft carriers and submarines (see figure 5).
Navy officials described the nuclear propulsion program as rigorous,  technically demanding, and staffed with highly trained and skilled  personnel. Sailors in the nuclear propulsion occupation totaled nearly  23,000 in fiscal year 2016 (about 6 percent of the Navy’s active and  Reserve Component personnel), including approximately 5,700 officers  and about 17,200 enlisted members. The cadre of nuclear officers  includes specialties such as surface warfare officers; submarine warfare  officers; engineering duty officers; naval reactor engineers; pilots; and  naval flight officers. Enlisted personnel in the nuclear propulsion program  serve as operators and supervisors in the following types of skills, among  others: electronics technicians; electrician’s mates; engineering laboratory  technicians; and machinist’s mates.
Before their assignment to a nuclear billet, officers and enlisted personnel  attend 6 months of classroom study at the Navy’s nuclear power school,  and another 6 months of nuclear prototype training, where they acquire  hands-on experience. Navy officials estimate that the cost of nuclear  training was about $405,000 per officer or enlisted student as of fiscal  year 2016. In addition, the cost of accessing and retaining a nuclear  officer through his or her initial service obligation, including expenses for  undergraduate education and salary, is estimated to have been $581,000  as of fiscal year 2016.
section_title: Civilian Nuclear Employment
paragraphs: As of 2016, the U.S. nuclear industry includes 60 commercially operating  nuclear power plants across 30 states and more than 100,000  employees. The median pay for a civilian nuclear engineer was about  $103,000 per year in 2015, according to the U.S. Bureau of Labor  Statistics. Officers and enlisted members of the Navy’s nuclear propulsion  program can transition easily to civilian employment in the nuclear  industry for several reasons, according to Navy officials. First, officials  stated that civilian nuclear jobs are directly correlated with skills that  nuclear personnel acquire in the Navy, and officers can complete civilian  nuclear certifications on their first attempt nearly twice as frequently as  can other new hires. Second, officials told us that civilian employers can  train a new employee hired from the Navy with fewer resources and about  half the time compared with training an employee hired from outside the  nuclear propulsion program. Finally, Navy officials told us that, due to a  wave of expected civilian retirements through 2021, more than 45,000  civilian nuclear jobs may become available. On the basis of feedback  from nuclear personnel leaving the Navy, Navy officials also told us that  high salaries in the civilian sector and the appeal of geographic stability  are factors that influence retention in the nuclear propulsion program. The  Navy estimates that about 80 percent of transitioning nuclear officers  accept jobs in technical management in the civilian nuclear industry.
section_title: The Navy’s Special and Incentive Pays for Nuclear Propulsion Personnel
paragraphs: To help meet retention and recruitment goals, the Navy has maintained a  long-standing program of special and incentive (S&I) pays for nuclear  propulsion personnel. Navy officials told us that these pays are a last line  of defense, coupled with non-monetary incentives, for mitigating declining  retention in the nuclear community.
Currently, there are 11 S&I pays available in the Navy for the recruitment  and retention of nuclear personnel. Five of the 11 pays are limited to  officers in the nuclear propulsion community and are described in table 3.
The other 6 pays, for enlisted personnel, are discussed later in this  appendix.
Of the five pays shown in table 3, nuclear officers may receive only one at  a time. A nuclear officer will generally receive one or more of these pays  over his or her career. The Navy manages the first four pays in table 3  collectively and refers to them as the Nuclear Officer Incentive Pay  (NOIP) program. Compared with S&I pays available to officers in other  Navy occupations, the community of nuclear propulsion officers ranks  second to the medical community in terms of total possible S&I pay  compensation over a 30-year career. Specifically, the Navy estimated that  in fiscal year 2015, a medical officer could earn about $1.6 million in S&I  pays over his or her career, while a nuclear propulsion officer could earn  approximately $1.1 million over a career. The total amount of possible  career S&I pays for a nuclear officer is about twice that of the next highest  compensated career group——about $530,000 for a Sea, Air, Land  (SEAL) officer over his or her career.
There are 6 S&I pays available to enlisted nuclear personnel in  connection with their service in nuclear occupations. These 6 pays are  shown in table 4 and are discussed in further detail below.
Of the 6 S&I pays for enlisted nuclear personnel shown in table 4, all but  Enlisted Supervisor Retention Pay (ESRP) are also offered across the  Navy to select occupations or specialties outside of the nuclear field.  Enlistees selected for nuclear training may be eligible for an enlistment  bonus if they complete training and attain their nuclear rating. After  attaining their nuclear rating, nuclear-trained enlisted personnel are then  eligible to receive monthly Special Duty Assignment Pay (SDAP) of up to  $600 per month, depending on their billet. Many enlisted nuclear  personnel will also apply for and receive one or more reenlistment  bonuses over their careers. Specifically, eligible members may receive a  Selective Reenlistment Bonus (SRB) if they have fewer than 10 years of  service and an ESRP bonus once they have more than 10 years of  service.
In addition to monthly SDAP and one or more SRB and ESRP bonuses,  nuclear-trained enlisted personnel may also be eligible for monthly Sea  Duty Incentive Pay (SDIP) and monthly Assignment Incentive Pay (AIP)  at some point (or points) in their career. SDIP and AIP are limited to  sailors who apply and are selected to fill certain critical billets. Within the  nuclear propulsion program, SDIP payments of either $450 or $1,000 per  month are limited to two specific types of supervisory billets on  submarines at sea. As of 2016, AIP amounts are $166.67 per month and  are available only to sailors who volunteer to serve as Nuclear Power  Training Unit instructors.
section_title: Retention Bonuses Represented the Largest Portion of the Navy’s S&I Pay Obligations for the Nuclear Propulsion Occupation in Fiscal Years 2010 through 2015
paragraphs: The Navy obligated more than $169 million per year in constant 2015  dollars, on average, on nuclear-related S&I pays from fiscal years 2010  through 2015. This $169 million average amount represented  approximately 11 percent of the Navy’s average annual obligations for  special and incentive pays to all of its active duty personnel during that  same period. Although for fiscal years 2010 through 2015 the Navy’s total  annual obligations for all S&I pays declined by about 17 percent, S&I  pays for nuclear personnel increased by 2 percent over the same period  in constant 2015 dollars. Retention bonuses for officers and enlisted  personnel—specifically, NOIP and SRB—accounted for the largest total  obligations of the Navy’s S&I pays that we analyzed further for the  nuclear occupation (see figure 6).
subsections: section_title: S&I Pay Obligations for Nuclear Officers
paragraphs: For fiscal years 2010 through 2015, total obligations for officer S&I pays  declined by approximately 7 percent, from approximately $80 million to  about $75 million in constant 2015 dollars. NOIP obligations accounted  for about 99 percent of those obligations. By contrast, SSIP comprised  around 1 percent of obligations over that period because of its limited use  by the Navy for retaining a goal of 25 O-5 or O-6 submarine officers each  year. As shown in figure 7, NOIP obligations for Nuclear Officer  Continuation Pay (COPAY), Nuclear Career Annual Incentive Bonuses  (AIB), and Nuclear Career Accession Bonuses (NCAB), in particular,  varied in accordance with yearly changes in the number of recipients for  those pays.
Obligations for COPAY, AIB, and NCAB increased in fiscal years 2011  and 2012 following years in which the Navy fell short of officer retention  goals. Because retention levels for nuclear surface warfare officers  declined each year from 2010 to 2014, according to NOIP program  documentation, the Navy increased the COPAY rate for this group of  officers from $30,000 to $35,000 (in nominal dollars) per year in  December 2014.
section_title: S&I Pay Obligations for Nuclear Enlisted Personnel
paragraphs: For fiscal years 2010 through 2015, total obligations for S&I pays for  nuclear enlisted personnel increased by nearly 11 percent, from about  $85 million to approximately $94 million in constant 2015 dollars. SRB  obligations accounted for about half or more of those total obligations  each year. As shown in figure 8, SRB obligations generally increased in  proportion with yearly changes in the number of recipients, rising overall  by about 45 percent from fiscal year 2010 to fiscal year 2015 in constant  2015 dollars.
SRB obligations for nuclear personnel also varied from year to year  because of changes the Navy made to the program in terms of the  possible amounts that sailors were eligible to receive. Specifically, award  ceilings and bonus multiples were increased or decreased for certain  nuclear ratings and reenlistment “zones” at different times. For example,  in April 2014 seven different nuclear ratings became eligible for an  increased, newly established ceiling of $100,000. The Navy also  increased the multiples associated with a few ratings and reenlistment  zones at that time. On the other hand, in September 2012 the Navy  decreased the bonus multiples for three nuclear ratings.
Figure 9 shows that, for fiscal years 2010 through 2015, total obligations  for SDAP to nuclear enlisted personnel decreased overall from $27  million to $26 million (about 5 percent) in constant 2015 dollars, while the  numbers of recipients increased (by approximately 9 percent).
Our analysis showed that the downward trend in SDAP obligations  relative to the increased number of recipients is attributable in part to the  effects of inflation. The SDAP award levels have remained the same  since December 2006.
The Navy’s obligations for ESRP declined steadily each year from fiscal  years 2010 to 2014 in constant 2015 dollars (see figure 10).
Figure 10 also shows that ESRP recipients declined in all years except  fiscal year 2012. The increase in that year corresponded with the Navy’s  January 2012 restructuring of the ESRP program. Specifically, the Navy  increased the maximum eligibility period for enlisted personnel in terms of  their years of service from 20 to 23. This change increased the number of  sailors eligible for the bonus and ultimately increased the total number of  reenlistments. In addition, the Navy reconfigured its reenlistment zones  for ESRP at that time, including narrowing the zone associated with its  most expensive contracts and thereby decreasing their associated costs.  According to Navy program documents we reviewed, the reconfiguration  of ESRP incentivized retention of the most qualified senior enlisted sailors  and linked ESRP eligibility to continued achievement of career  milestones. The result, according to the program documents, has been an  overall improvement in program outcomes in terms of the sailors retained,  with lower yearly costs.
section_title: Appendix III: Case Study on Aviation Pays
subsections: section_title: Overview of the Aviation Occupation
paragraphs: Each of the military services relies on pilots to operate aircraft (see figure  11). For the purpose of this case study, we define “pilot” as a  servicemember directly responsible for the flight operations of an aircraft.  We include both traditionally piloted aircraft (aircraft with crew on board,  both fixed-wing and rotary-wing) and remotely piloted aircraft (aircraft  without crew on board). However, due to data limitations, we have  included non-pilot aviators in some trend analyses and have noted when  we have done so.
Before qualifying to operate aircraft for military missions, pilots must  complete a series of training requirements. The lengths associated with  this training vary by specific type of aircraft and range from 18 weeks for  remotely piloted aircraft (RPA) operators on certain platforms to 5 years  for a fighter jet pilot. The cost of replacing an experienced pilot can be  significant. For example, in 2014 the Army estimated the cost of replacing  a special operations rotary-wing pilot with 6 years of experience at $8.8  million, and in 2014 the Air Force estimated the cost of replacing a fighter  pilot with 5 years of experience at $9 million.
section_title: Civilian Pilot Employment
paragraphs: According to the U.S. Bureau of Labor Statistics, the U.S. civilian-sector  aviation industry employed 238,400 airline and commercial pilots,  copilots, and flight engineers in 2014. The U.S. military employed  approximately 34,100 active-duty pilots in the same timeframe. In  February 2014, we reported that U.S. airlines have historically recruited  military pilots and that these pilots can be competitive in the commercial  aviation sector due to their accumulation of flying hours while in the  military. However, we also noted that, according to some airline  representatives, the percentage of pilots with military experience who  were hired by airlines declined from about 70 percent prior to 2001 to  about 30 percent as of 2013. Most of the services discussed the  relationship between their military pilot workforces and the civilian aviation  sector in their annual reports analyzing the effects of the Aviation  Continuation Pay (ACP) program and its impact on retention. Our  analysis found that the services’ conclusions about the level of  competition represented by recruitment from the commercial aviation  sector varied. Specifically, the Air Force concluded that it needed to  increase bonus amounts to retain sufficient numbers of pilots, while the  Navy and the Marine Corps concluded that they did not. For example, in  reports supporting the ACP programs in fiscal years 2010 through 2015,  the Air Force consistently stated that it expected increased recruitment of  pilots from the commercial aviation sector, and cited this as justification  for continued offerings of retention bonuses. In contrast, the Navy stated  that airline compensation would have to increase in order to have a  significant impact on the retention of Navy pilots. Also, the Marine Corps  reported that the potential increase in hiring by commercial airlines did not  warrant the reinstatement of ACP bonuses for fiscal year 2013. The fiscal  year 2016 National Defense Authorization Act required the Department of  Defense (DOD) to report to Congress by February 1, 2016, on a market- based compensation approach to the retention of aviation officers that  considers the pay and allowances offered by commercial airlines to pilots  and the propensity of pilots to leave the Air Force to become commercial  airline pilots. DOD responded in July 2016 with a report in support of  increasing aviation-related S&I pays. DOD’s report noted that the military  has experienced high levels of pilot retention as a result of decreased  civilian airline pilot salaries, significantly reduced civilian airline pilot  hiring, increase military pay and benefits, and an increased sense of duty  and patriotism after the events of September 11th, 2001. However, the  report added that the department—based on a study by the RAND  Corporation—anticipated that increased hiring by commercial airlines  over the next 5 to 7 years would require bonus amounts to increase from  $25,000 per year to a range of $38,500—62,500 per year. As such, DOD  requested that Congress consider increasing the rates of Aviation Career  Incentive Pay, and increase the maximum authorized level of Aviation  Continuation Pay from $25,000 per year to $35,000 per year.
section_title: Aviation Workforce Mix
paragraphs: According to DOD officials, all traditionally piloted aircraft are operated by  officers, while some RPAs are operated by enlisted personnel.  Specifically, the Marine Corps and the Army rely on enlisted personnel to  operate their RPAs, while officers generally operate Air Force and Navy  RPAs. The Air Force initially assigned servicemembers from the  traditionally piloted aircraft community to pilot RPAs until a dedicated  RPA-pilot career track was established. The Navy uses only pilots rated  on traditionally piloted aircraft to fly RPAs and, according to officials, does  not plan to create a designated RPA career track. These differences in  how the services staff RPA positions, combined with statutory and policy  limitations on offering aviation-specific S&I pays for the RPA community,  have led to a variety of S&I pays being used to retain RPA operators.  Specifically, per statute and DOD policy, only pilots rated on traditionally  piloted aircraft have been provided Aviation Career Incentive Pay (ACIP).  In addition, the decision of the Army and the Marine Corps to use enlisted  personnel to operate RPAs has meant that these pilots cannot receive  ACIP or ACP, as only officers qualify for these pays. Instead, the Army  and the Marine Corps have used the Selective Reenlistment Bonus  (SRB) to retain these pilots. In April 2014 we reported on the need for the  Air Force to assess its workforce mix for RPA operators. Specifically, we  recommended that the Air Force develop a recruiting and retention  strategy for RPA operators and evaluate using alternative personnel  populations to operate RPAs. The Air Force concurred with our  recommendation to develop a recruiting and retention strategy, stating  that it expected to have a recruiting and retention strategy that was  tailored to the specific needs and challenges of RPA pilots by October  2015. However, this has not been completed. The Air Force partially  concurred with our recommendation to evaluate the viability of using  alternative personnel populations as RPA pilots, but as of December  2016 this recommendation has not been implemented.
section_title: Special and Incentive Pays for Pilots
paragraphs: The military services used a variety of special and incentive pay programs  to retain pilots in fiscal years 2010 through 2015, including combinations  of up to four different types of pays (see table 5).
section_title: Pilot-Specific Pays
subsections: section_title: Aviation Career Incentive Pay (ACIP)
paragraphs: ACIP is offered only to officers. DOD defines this pay as a financial  incentive for officers to pursue a military career as aviators. The pay was  first offered in 1974, in part to compensate aviators for the inherent  dangers associated with military flight. Until October 2016, DOD policy for  ACIP did not recognize operation of an RPA as aerial flight, and therefore  RPA pilots who were not graduates of traditional undergraduate pilot  training were not authorized to receive ACIP. From fiscal years 2010  through 2015, the pay levels for ACIP established in statute varied by  years of aviation service, and ranged from $125 to $840 per month  ($1,500 - $10,080 per year) for pilots rated on traditionally piloted  aircraft. For example, the rate for pilots with over 6 to 14 years of  aviation service (which accounted for 37 percent of military pilots for fiscal  years 2010 through 2015) has not changed since 1989, which due to  inflation equates to a net 57 percent decrease in the purchasing power of  this benefit. Recent statutory changes have allowed DOD to begin  offering ACIP to RPA pilots, to a maximum of $1,000 per month ($12,000  per year). DOD has updated guidance to reflect this change, and has  also provided the services with the option not to provide ACIP to all  pilots. Our analysis of ACIP obligations from fiscal years 2010 through  2015 shows an overall decrease of 15 percent. Figure 12 displays how  obligations for ACIP decreased across all four military services from fiscal  years 2010 through 2015. During this time the population of active duty  pilots operating traditionally piloted aircraft declined by 5 percent.
section_title: Aviation Continuation Pay (ACP)
paragraphs: ACP is offered only to officers. The pay was first authorized in fiscal year  1981, and DOD defines it as a financial incentive to retain qualified,  experienced officer aviators who have completed—or are within 1 year of  completing—any active duty service commitment incurred for  undergraduate aviator service. According to DOD officials, in practice,  pilots generally qualify for ACP at approximately 10 years of aviation  service—the end of their initial active duty service obligation. From fiscal  year 2010 through 2015 the level of pay was set by each service and was  capped at $25,000 per year for pilots operating traditionally piloted  aircraft. During this time, most of the services offered contracts up to 5 or 6 years long, but in fiscal year 2013, the Air Force began offering 9- year contracts to fighter pilots for a total contract amount of $225,000.  Starting in fiscal year 2015, the Air Force offered 9-year contracts to all  pilots for a total contract amount of up to $225,000.
The services may target ACP to specific groups of aviators, adjust the  pay amounts on an annual basis, or choose not to offer the pay at all.  Table 6 shows that the services implemented ACP differently for pilots of  different types of aircraft, and that their implementation approaches  generally varied from year to year.
The Reserve Components also provided ACP to pilots. Specifically, the  Marine Corps Reserve, the Air Force Reserve, the Air National Guard,  and the Navy Reserve all offered ACP to pilots for at least a portion of  fiscal years 2010 through 2015. Similarly to the active component, the  Reserve Components used ACP to retain pilots to help personnel  inventories meet requirements.
For fiscal years 2010 through 2015, obligations for ACP decreased by 53  percent across DOD. Figure 13 shows how the extent of this decrease  varied for each of the services, largely due to different policy decisions at  the service level about how to implement the pay. These implementation  approaches are discussed in further detail below.
We found that each of the services took a different approach to  implementing ACP. Specifically, there are differences in how the services  identified the target population and established the contract amounts  offered. These approaches resulted in different amounts of ACP offered  (see table 6). Some of the primary differences we identified are that the  Air Force offered ACP to broad categories of pilots (for example, fighter  pilots, RPA pilots), while the Navy and Marine Corps offered ACP by  specific platform (that is, the model of aircraft a pilot operates). The Army  offered ACP to a small group of elite special operations rotary-wing pilots.  Also, the Marine Corps suspended ACP offerings in fiscal year 2012, and  is the only service to have done so.
section_title: Additional Special and Incentive Pays Offered to Pilots
subsections: section_title: Selective Reenlistment Bonus (SRB)
paragraphs: The SRB is available only to enlisted personnel and therefore is used as  an aviation pay only by the Army and the Marine Corps, because the  Navy and the Air Force do not generally use enlisted personnel to pilot  aircraft. DOD defines this pay as an incentive for enlisted personnel to  reenlist in positions experiencing retention challenges. The level of pay is  set by each service, not to exceed $30,000 for each year of obligated  service on active duty. The Army and the Marine Corps have offered the  SRB to enlisted personnel operating RPAs. Specifically, in fiscal years  2010 through 2015 the Army provided 783 bonuses to RPA operators, at  an average rate of $9,501 per year, and the Marine Corps provided 123  bonuses to RPA operators, at an average rate of $2,376 per year.
section_title: Assignment Incentive Pay (AIP)
paragraphs: Both officers and enlisted personnel may qualify for AIP. DOD defines this  as a pay used to encourage members to volunteer for difficult-to-fill jobs  or assignments in less desirable locations. The level of pay is set by each  service, up to a cap of $3,000 per month ($36,000 per year). For fiscal  years 2010 through 2015, according to service officials, the Army offered  AIP to pilots in the Special Operations Aviation Regiment, and the Air  Force offered AIP to RPA operators. Air Force officials told us that their  intent was to use AIP to allow pilots only rated on RPAs to be  compensated at a comparable level to those RPA operators who were  rated on traditionally piloted aircraft and who were receiving ACIP.
section_title: Appendix IV: Case Study on Cyber Workforce Pays
subsections: section_title: DOD’s Cybersecurity Workforce Mix
paragraphs: The Department of Defense’s (DOD) cybersecurity workforce includes  military personnel within the active and Reserve Components, DOD  civilians, and contractors who all work together to accomplish DOD’s  three primary cyber missions: (1) to defend DOD networks, systems, and  information; (2) to defend the U.S. homeland and U.S. national interests  against cyberattacks of significant consequence; and (3) to provide cyber  support to military operational and contingency plans. The cybersecurity  workforce includes various roles, such as designing and building secure  information networks and systems, monitoring and detecting unauthorized  activity in the cyberspace domain, and performing offensive and  defensive cyberspace operations in support of the full range of military  operations (see figure 14).
In November 2011 we reported that DOD faced challenges in determining  the appropriate size for its cybersecurity workforce because of variations  in how work is defined and the lack of a designated cybersecurity career  field identifier for all of its cybersecurity personnel. Further, we reported  that DOD had established a cybersecurity workforce plan, but that the  plan only partially described strategies to address gaps in human capital  approaches and critical skills and competencies, and that it did not  address performance management or recruiting flexibilities. In addition,  the plan only partially described building the capacity to support workforce  strategies. We recommended that DOD either update its departmentwide  cybersecurity workforce plan or ensure that departmental components  have plans that appropriately address human capital approaches, critical  skills, competencies, and supporting requirements for its cybersecurity  workforce strategies. DOD concurred and implemented this  recommendation by updating its cybersecurity workforce plan. DOD  policy calls for maintaining a total force management perspective to  provide qualified cyberspace government civilian and military personnel to  identified and authorized positions, augmented where appropriate by  contracted services support. These personnel function as an integrated  workforce with complementary skill sets to provide an agile, flexible  response to DOD requirements. In May 2011 we reported that DOD  needed to define cybersecurity personnel with greater specificity in order  for the military services to organize, train, and equip cyber forces. We  recommended that DOD develop and publish detailed policies and  guidance pertaining to categories of personnel who can conduct the  various forms of cyberspace operations. DOD agreed with this  recommendation and has taken steps to implement it. DOD asked the  Institute for Defense Analyses to assess the current and projected total  force mix for DOD’s Cyber Mission Force and, if possible, to suggest  alternative staffing plans. The Institute for Defense Analyses issued its  report in August 2016.
section_title: Employment of Civilian Cybersecurity Personnel
paragraphs: According to the U.S. Bureau of Labor Statistics, in 2014 more than  82,000 information security analysts were employed in the United States,  and in 2015 the median annual wage for information security analysts  was $90,120. According to information obtained from the services, there  is a need to offer S&I pays to the cybersecurity military workforce in order  to compete with the civilian sector, which includes government, DOD  contractors, and corporations. For example, the Navy noted in its  justification for offering selective reenlistment bonuses (SRBs) that sailors  within cyber-related career fields could qualify for positions in the civilian  workforce with salaries starting at $90,000 with a $5,000 to $10,000 sign- on bonus.
section_title: Special and Incentive Pays to Retain Cybersecurity Personnel
paragraphs: Service officials told us that for fiscal years 2010 through 2015 the  monetary incentive they have primarily relied on to retain cybersecurity  personnel is the SRB. In addition to the SRB, starting in fiscal year 2015  the Army offered assignment incentive pay (AIP) and special duty  assignment pay (SDAP) to a select group of cybersecurity personnel  working at the Army Cyber Command. Starting in fiscal year 2016 the Air  Force offered SDAP to those in a designated cybersecurity career field.  Of the retention bonuses and assignment pays being offered to  cybersecurity personnel, officers are eligible only for AIP. According to  services officials, during this same period S&I pays to officers in  cybersecurity career fields were not as necessary as they were for  enlisted personnel because the services had not experienced the same  growth and retention concerns as they had with the enlisted personnel.  However, an Air Force official noted that due to low staffing for  Cyberspace Operations officers, the Air Force is currently assessing  whether to offer the officer retention bonus. According to service officials,  the services have the flexibility they need to effectively use S&I pays to  address retention issues in the cybersecurity workforce. Table 7 shows  the different monetary S&I pays that the services have used to incentivize  cybersecurity personnel to remain in cyber-related career fields for fiscal  years 2010 through 2015.
subsections: section_title: Selective Reenlistment Bonus
paragraphs: For fiscal years 2010 through 2015, the services offered SRBs to cyber- related career fields. According to DOD, the SRB is the primary monetary  force-shaping tool to achieve required enlisted retention requirements by  occupation or skill set. The level of pay is set by each service and is  limited by the cap placed by DOD of $25,000 for each year of obligated  service in an active component. The maximum amount of SRB payments  that servicemembers can receive is $100,000 per contract for the active  component. Factors that military service officials cited for determining  SRB bonuses for cyber-related career fields include growing  requirements, mission criticality of the skill set, and replacement costs.  Officials also noted that they take into account previous retention trends,  current budget constraints, and input from community managers. All of  the services offer bonuses by career field identifier, which identifies the  basic skills and training the servicemember holds. The Navy also may  offer SRBs by rating and offers bonuses to personnel within the  Cryptologic Technician (Networks) and Information Systems Technician  ratings. As a result, all qualified personnel in a career field within the  rating would be eligible for the bonus. According to Navy officials, they  only offer by rating when necessary and in most cases the Navy uses the  combination of rating, career field, and zone. Based on our review of 13  SRB bonus announcements for fiscal years 2010 through 2015, the Navy  offered a bonus to those in Cryptologic Technician (Networks) rating in all  13 announcements and those in Information Systems Technician rating in  11 of the 13 announcements. The Army adjusts the amount of the SRB  based on rank, additional skills above the basic skills required for the  career field, and location; the Navy and the Air Force adjust the bonus  multiplier based on zone; and the Marine Corps adjusts the amount  based on rank and zone. For example, the Army’s award amounts for  Cryptologic Network Warfare Specialists for a 4-year reenlistment varied  from $8,000 to $41,800 for fiscal years 2010 through 2015, depending on  the rank, zone, skill, and location. Table 8 depicts the amounts offered for  fiscal years 2010 through 2015 for selected career fields.
section_title: Other S&I Pays to Incentivize Cybersecurity Personnel
paragraphs: In addition to offering SRBs, the Army has recently begun to offer AIP and  SDAP to select cybersecurity personnel, and the Air Force has recently  begun to offer SDAP. In 2015 the Army first approved the use of SDAP  and AIP to target certain cybersecurity personnel. As of February 2015  these pays targeted qualified cybersecurity personnel within the Army  Cyber Command’s Cyber Mission Force. According to Army  documentation, SDAP was approved because those in the Army’s Cyber  Mission Force require special qualifications met through rigorous  screening or special schooling. Also according to Army documentation,  AIP was approved because positions within the Army’s Cyber Mission  Force were considered difficult to fill. According to DOD policy, AIP is a  temporary compensation tool to provide an additional monetary incentive  to encourage servicemembers to volunteer for select difficult-to-fill or less  desirable assignments, locations, or units designated by, and under the  conditions of service specified by, the Secretary concerned. According to  Army officials, the Army is exploring other approaches to further  incentivize cybersecurity personnel within the Army Cyber Command’s  Cyber Mission Force. Unlike the bonuses that are offered to soldiers  qualified in a specified career field, the Army does not offer AIP or SDAP  by career field and instead offers these pays only to personnel who are  permanently assigned to authorized positions within the Cyber Mission  Force and have completed the appropriate training and certifications.  According to an Army official, in fiscal year 2015 the Army obligated  $151,000 for 85 soldiers within the Cyber Mission Force to receive SDAP  and obligated $310,000 for 128 personnel within the Cyber Mission Force  to receive AIP. As noted in table 9, eligible cyber personnel receive  monthly payments of between $350 and $800.
According to an Air Force official, in fiscal year 2016 the Air Force first  offered SDAP to cybersecurity personnel in career field Cyber Warfare  Operations (1B4X1). The Air Force offered SDAP because  servicemembers in career field 1B4X1 are considered to have highly  specialized training and skill sets. Eligible cyber enlisted personnel  receive monthly payments of between $150 and $225.
section_title: Total Obligations for Selective Reenlistment Bonuses for Enlisted Cybersecurity Personnel Have Increased in Recent Years
paragraphs: As noted earlier, total obligations for all enlisted SRBs have been  declining; however, SRB obligations for certain cybersecurity career fields  have increased in recent years. For example, as shown in figure 15, after  a significant decline from fiscal year 2010, Army obligations for cyber- related SRBs have been increasing since fiscal year 2014, and as shown  in figures 16 and 17, Navy and Marine Corps obligations for cyber-related  SRBs have been increasing since fiscal year 2012. According to Army  officials, the Army did not start to target cyber until 2013. The higher  obligation amount seen in figure 15 for fiscal year 2010 was not due to a  focus on cyber but was in part due to shortages in high density career  fields, such as 25B and 25U. As noted earlier, in addition to cyber  personnel, these career fields contain other types of personnel, such as  information technology personnel. According to Navy officials, the  decrease in fiscal year 2012 and the subsequent increase reflect the  reenlistment need for the skills at the given time. According to Marine  Corps officials, obligations for cyber-related fields decreased in fiscal  years 2011 and 2012 because of reductions in force structure. The  Marine Corps was reaching its reduced 2012 overall inventory goal, but  for certain career fields containing cybersecurity personnel there was an  increase in force structure for fiscal year 2015 to support the Cyber  Mission Force build-up, which DOD began in 2012. The Air Force was  unable to provide reliable SRB obligations for its cyber-related career  fields.
The average per-person SRB amounts the services offered to cyber- related career fields for fiscal years 2010 through 2015 varied, as shown  in table 10, ranging from about $2,277 to about $71,788. During this time,  the Navy’s Interactive Operators have consistently on average received  the highest amounts, ranging from about $58,594 to $71,788. The Army  on average paid the lowest bonus amounts to personnel within cyber- related career fields.
According to service officials, the Reserve Components may also use  retention bonuses to retain personnel in cyber-related career fields.  However, according to information received from service officials, the  number of S&I pays that have been offered to retain cybersecurity  personnel within the Reserve Components is relatively small. For  example, according to documentation provided by the Navy, for fiscal  years 2010 through 2015, the Navy Reserve expended about $379,000 to  retain 68 personnel in cyber-related career fields. According to Marine  Corps officials, the Marine Corps Reserve offers those in the Cyber  Security Technician career field a retention bonus, and the current  requirement for this career field is 12 personnel. Further, according to Air  Force officials, the Air National Guard has not offered bonuses in the past  to cyber-related career fields, and the Air Force Reserve did not offer  cyber-related career field bonuses in fiscal year 2015 and did not have  plans to offer bonuses in fiscal year 2016. For these reasons, we did not  include the Reserve Components in our case study for cybersecurity.
section_title: Appendix V: Objectives, Scope, and Methodology
paragraphs: A Senate Armed Services Committee report accompanying a bill for the  National Defense Authorization Act for Fiscal Year 2016 included a  provision that we review the effectiveness of the Department of Defense’s  (DOD) special and incentive (S&I) pay programs. This report assesses  (1) trends in DOD obligations for S&I pay programs for fiscal years 2005  through 2015 and the extent to which DOD reports such obligations  department-wide and (2) the extent to which the military services applied  key principles of effective human capital management in the design of  S&I pay programs for recruitment and retention of servicemembers in  selected high-skill occupations for fiscal years 2010 through 2015.
To address our first objective, we analyzed obligations for S&I pays from  the military services’ active and Reserve Component military personnel  accounts for fiscal years 2005 through 2015. We selected this timeframe  to enable us to evaluate trends over time, and fiscal year 2015 was the  most recent year of available obligations data at the time of our review.  We obtained these data from the annual budget justification materials that  DOD and the military services published in connection with their military  personnel appropriations requests. We normalized S&I pay obligations  data to constant fiscal year 2015 dollars using the series of military  personnel deflators for fiscal years 2005 through 2015 published in  DOD’s National Defense Budget Estimates for Fiscal Year 2015. To  analyze trends in S&I pay obligations over time across the active military  service components, we obtained obligations for the more than 60 S&I  pays across the services and grouped them into nine categories in  accordance with the consolidated pay categories authorized by Congress  in the National Defense Authorization Act for Fiscal Year 2008. We  compared each active component’s total S&I pay obligations from fiscal  years 2005 through 2015 with each service’s total military personnel  obligations. In addition, we obtained average strength numbers from the  annual budget justification materials and compared these data with the  services’ S&I pay obligations and assessed any possible correlation. We  discussed with service officials the factors that may have contributed to  trends we identified in the S&I pay obligations data we reviewed. To  assess the reliability of the data on S&I pays, we assessed the  completeness of the data and compared the data against other data  sources. GAO has designated DOD’s financial management area as high  risk due to long-standing deficiencies in DOD’s systems, processes, and  internal controls. Since some of these systems provide the data used in  the budgeting process, there are limitations to the use of DOD budget  data. However, based on discussions with appropriate DOD officials and  our comparison of the trends in the budget data against other data  sources, we determined that the S&I pay obligation data for the active  component are sufficiently reliable for showing overall trends for S&I  pays. However, we determined that data for Reserve Component S&I  pays were unreliable due to incompleteness or inconsistency, as  described earlier in this report. We compared the available Reserve  Component data with guidance established in DOD’s Financial  Management Regulation, which provides guidance for a uniform budget  and accounting classification that is to be used for preparing budget  estimates, including the budget justification materials we reviewed.  Further, we examined DOD policy, key statutes and accounting standards  for developing and reporting cost information to determine the extent to  which they were followed by DOD when reporting on S&I pay  obligations. We compared the available Reserve Component data with  guidance established in DOD’s Financial Management Regulation and  with federal internal control standards to determine the extent to which  the guidance was followed.
To address our second objective, we selected a non-generalizable  sample of three high-skill occupations from across the military services to  review in greater detail as case studies. For the purposes of this review,  we limited the scope and definition of “high-skill occupations” to the six  occupations identified in Senate Report 114-49: nuclear maintenance and  engineering (i.e., nuclear propulsion), pilots (i.e., aviation), critical  language skills, information technology, cyber warfare (i.e.,  cybersecurity), and special operations. In selecting case studies from this  pool of occupations, we sought to include (1) a mix of S&I pay programs  associated with an occupation-specific pay authority and S&I pay  programs that apply authorities that are available across occupation  types; (2) programs containing pays in varying stages of implementing the  consolidation authorities established in the National Defense  Authorization Act for Fiscal Year 2008; and (3) at least one emerging  occupation. On the basis of these three criteria, we selected nuclear  propulsion, aviation, and cybersecurity as case studies. We selected  nuclear because there are occupation-specific pays for nuclear personnel  and the consolidation special bonus and incentive pay authorities for  nuclear officers were completely implemented. We selected aviation  because there are occupation-specific pays for aviators and the  consolidation special aviation incentive pay and bonus authorities have  not been fully implemented. In addition, we selected aviation because of  the recent policy changes for aviation-related S&I pays involving remotely piloted aircraft pilots. Lastly, we selected cybersecurity because it is an  emerging career field.
While the information obtained from the case studies is not generalizable  for all occupations across DOD, it enabled us to obtain the perspectives  of how the services use their S&I pay programs for the three high-skill  occupations we selected.
To determine the extent to which the military services applied key  principles of effective human capital management in the design of their  S&I pay programs associated with our selected occupations, we reviewed  DOD and service policies and guidance on the special and incentive pays  used for the three occupations we selected. We analyzed available data  and reports from the military services on the eligibility criteria, pay  amounts, and numbers of recipients in each of the occupations, and we  discussed with cognizant officials the context for changes to the S&I pay  programs targeting these occupations. For our selected occupations, we  reviewed the services’ retention, assignment, and officer accession S&I  pay obligations to analyze trends and to understand reasons for any  fluctuations we identified from fiscal years 2010 through 2015. To identify  key principles of effective human capital management, we reviewed a  compilation of GAO’s body of work on human capital management,  DOD’s Eleventh Quadrennial Review of Military Compensation, and the  DOD Diversity and Inclusion Strategic Plan 2012 - 2017. Using these  sources, we assembled a list of seven key principles of effective human  capital management. To identify the extent to which the services met  these key principles in the design of their S&I pay programs, we reviewed  the principles and compared them with service-provided documentation  on the S&I pay programs for our three case studies, including policies and  guidance, administrative messages, program proposals and justifications,  as well as with information obtained through interviews with service  officials. The analysts then used this comparison between the principles  and the service information to determine whether each service’s  approach to the pay programs for our case studies was consistent with  each principle. Specifically, for each case study of S&I pay programs  associated with nuclear propulsion, aviation, and cyber operations, an  analyst independently assessed whether each service’s processes for  planning, implementing, and monitoring the pay programs addressed,  partially addressed, or did not address the seven principles of human  capital management. By addressed, we mean the principle was applied  throughout the program and demonstrated through documentation and  testimonial information from interviews with service officials; by partially  addressed, we mean one or more parts of the principle, but not all parts,  were explicitly addressed (e.g., the principle is addressed for one or a few  pays within a program, but not for all; or the principle is demonstrated  through policy but not through implementation); and by not addressed, we  mean that no part of the principle was explicitly addressed from reviewing  program documentation or interviews with officials. Following the initial  case study assessments, a second analyst reviewed all available  documentation and testimonial evidence for each principle and each  service’s programs and made an assessment about the extent to which  the principle was addressed. Where the two analysts disagreed, they  discussed the evidence and reached consensus on the extent to which  the principle in question was addressed. Once the assessment process  was completed, we reviewed our results with cognizant DOD and service  officials and incorporated their feedback or additional information where  appropriate. In addition to the key principles for effective human capital  management, we also compared aspects of DOD’s application of S&I pay  program guidance with federal internal control standards that emphasize  the importance of establishing clear and consistent agency objectives.
To determine DOD’s progress in consolidating S&I pay programs from  legacy statutory authorities to new authorities established in the National  Defense Authorization Act for Fiscal Year 2008, we met with cognizant  DOD officials and we obtained and reviewed documentation related to  DOD’s implementation and status of the pay consolidation, such as  updated or new DOD instructions resulting from the consolidation effort.
We interviewed officials or, where appropriate, obtained documentation at  the organizations listed below:  Office of the Secretary of Defense
Office of the Under Secretary of Defense for Personnel and
Office of the Under Secretary of Defense, Comptroller
Office of the Assistant Secretary of Defense for Manpower and
Office of the Assistant Secretary of Defense for Health Affairs
Defense Manpower Data Center  Department of the Air Force
Office of the Assistant Secretary of the Air Force for Financial
Office of the Deputy Chief of Staff for Manpower, Personnel and  Services (A1)
Office of the Deputy Chief of Staff of the Army, G-1
Army Human Resources Command
Office of the Chief of the Army Reserve
Office of the Director of the Army National Guard
Office of the Assistant Secretary of the Navy for Manpower and
Office of the Deputy Chief of Naval Operations for Manpower,  Personnel, Training, and Operations (N1)
Office of the Deputy Commandant of the Marine Corps for Programs
Office of the Deputy Commandant of the Marine Corps for Manpower  and Reserve Affairs  We conducted this performance audit from July 2015 to February 2017 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 VI: Comments from the Department of Defense
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Beverly Schladt, Assistant Director; Melissa Blanco, Aica Dizon,  Farrah Graham, Foster Kerrison, Amie Lesser, Felicia Lopez, Martin  Mayer, Shahrzad Nikoo, Stephanie Santoso, John Van Schaik , and  Cheryl Weissman.
section_title: Related GAO Products
paragraphs: Unmanned Aerial Systems: Further Actions Needed to Fully Address Air  Force and Army Pilot Workforce Challenges. GAO-16-527T. Washington  D.C.: March 16, 2016.
Military Recruiting: Army National Guard Needs to Continue Monitoring,  Collect Better Data, and Assess Incentives Programs. GAO-16-36.  Washington D.C.: November 17, 2015.
Unmanned Aerial Systems: Actions Needed to Improve DOD Pilot  Training. GAO-15-461. Washington, D.C.: May 14, 2015.
Human Capital: DOD Should Fully Develop Its Civilian Strategic  Workforce Plan to Aid Decision Makers. GAO-14-565. Washington, D.C.:  July 9, 2014.
Air Force: Actions Needed to Strengthen Management of Unmanned  Aerial System Pilots. GAO-14-316. Washington, D.C.: April 10, 2014.
Imminent Danger Pay: Actions Needed Regarding Pay Designations in  the U.S. Central Command Area of Responsibility. GAO-14-230R.  Washington, D.C.: January 30, 2014.
Human Capital: Additional Steps Needed to Help Determine the Right  Size and Composition of DOD’s Total Workforce: GAO-13-470.  Washington, D.C.: May 29, 2013.
Cybersecurity Human Capital: Initiatives Need Better Planning and  Coordination. GAO-12-8. Washington, D.C.: November 29, 2011.
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.
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: 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.
A Model of Strategic Human Capital Management.GAO-02-373SP,  Washington, D.C.: March 15, 2002.