Military Personnel: Army Needs to Focus on Cost-Effective Use of Financial Incentives and Quality Standards in Managing Force Growth
Released: 2009-05-04T00:00:00

Letter

Background

DOD-wide, military personnel costs make up 23 percent of defense spending. According to GAO estimates, in fiscal year 2000 the average compensation for an active-duty soldier in terms of cash and noncash benefits and deferred benefits such as healthcare in retirement was $101,537. In fiscal year 2007, it cost about $125,000 a year to compensate an active-duty soldier, a rise of about 23 percent.The Army must annually recruit and retain more than twice the number of uniformed personnel needed by any other military service, and it has budgeted approximately $51.8 billion for military personnel in fiscal year 2009. Each fiscal year, the Army determines its quantity goals—the number of uniformed personnel it must recruit into the active Army, the Army Reserve, and the Army National Guard—based on the difference between the congressionally authorized end strength for each of these components and the projected number of currently serving personnel expected to continue their military service through the end of the fiscal year. In addition, requirements specific to the military services’ officer corps set out in law—specifically the Defense Officer Personnel Management Act—guide the Army’s management of these personnel.For example, the act sets the upper limit on the number of officers that the Army may have at any given time, and Senate Report No. 96-375 describes benchmarks for officer promotion rates. Congressional reports accompanying the Defense Officer Personnel Management Act also contain information intended to guide management of the officer corps.

Since 2004, two major Army initiatives—one to restructure the Army and another to expand its size—have influenced the Army’s needs for both enlisted and officer personnel.

In 2004, the Army began its multiyear modular force restructuring, sometimes referred to as “Army Modularity,” which involves the total redesign of the operational Army. It was initiated, in part, to support current operations in Iraq and Afghanistan. The foundation of modular restructuring is the creation of new, standardized, modular units that change the Army’s division-based force structure to a structure in which smaller, more numerous brigade formations are embedded within significant support elements. These new modular Brigade Combat Teams and Multi-Functional Support Brigades are designed to be self-sufficient, stand-alone units that are more rapidly deployable and better able to conduct joint and expeditionary combat and support operations than were their larger division-based predecessors. These units, along with Functional Support Brigades and modular Headquarters Units, comprise the Army’s new modular force. In most cases, modular brigades require a different personnel skill level mix than did the brigades they replace. In January 2007, the President announced an initiative—called Grow the Force—intended to expand the size of the Army in order to meet strategic demands and help reduce stress on the force. Subsequently, in October 2007, the Chief of Staff of the Army announced a plan to accelerate the original Grow the Force completion date from fiscal year 2013 to fiscal year 2010. The original plan called for an increase in active Army end strength of 65,000 personnel, bringing it to 547,400; an increase in Army National Guard end strength of approximately 8,200 personnel, bringing it to 358,200; and an increase in Army Reserve end strength of approximately 1,000, bringing it to 206,000. The accelerated plan calls for the active Army and the Army National Guard to achieve their target end strengths by fiscal year 2010—3 years earlier than initially planned; the accelerated plan does not affect the Army Reserve’s timeline. As we have previously reported, based on the original timeline, the Army’s preliminary cost estimate indicated that expanding the Army would require approximately $70.2 billion from fiscal year 2007 through fiscal year 2013 for military personnel, operations and maintenance, procurement, and military construction costs.The Army also anticipates that it will need additional supplemental funding to meet the accelerated timeline.

The Army has control over some but not all of the factors that affect recruiting. For example, to increase the number of recruits, the Army may choose to increase the size of its recruiting force or to use incentives, such as enlistment bonuses or educational benefits. However, according to the Congressional Budget Office, the combination of the duration of ongoing operations, the length and frequency of deployments, and the generally difficult nature of deployments has led to some concerns about the continuing effects of these factors on recruiting and retaining the force.Additionally, as we have previously reported, recent conditions present some of the most difficult recruiting and retention challenges DOD has experienced in recent history. Since the September 11, 2001, terrorist attacks on the United States, DOD has launched three major military operations requiring the deployment of significant numbers of military servicemembers. These are Operation Noble Eagle, which covers military operations related to homeland security; Operation Enduring Freedom, which includes ongoing military operations in Afghanistan and certain other countries; and Operation Iraqi Freedom, which includes ongoing military operations in Iraq. These military operations have greatly increased the rate at which personnel have been deployed, especially in the active Army, Army National Guard, Army Reserve, and the Marine Corps, which have provided the bulk of the military servicemembers for operations in Iraq. On the other hand, the recent downturn in the U.S. economy may increase potential recruits’ interest in military service, as DOD has historically found that more youth are willing to consider military service during periods of high unemployment. While unemployment rates in the United States dropped from 2003 through 2007—falling from 6 percent in 2003 to 4.6 percent in 2007—as of January 2009, the unemployment rates had risen to 7.6 percent.

The Army Is Well Ahead of Schedule in Growing the Force

By the end of fiscal year 2008, the Army had almost reached its overall growth goal, although the original Grow the Force plan called for the growth to be completed by 2013. The Army decided to accelerate this planned growth and complete it by fiscal year 2010. In fiscal year 2008, two Army components—the active Army and the Army National Guard— exceeded their fiscal year 2008 growth goals under the accelerated growth plan. All Army components have made progress in meeting their recruiting goals since fiscal year 2005, when none of them met recruiting goals. In 2008, all components exceeded their recruiting goals. The active Army and the Army Reserve also exceeded their retention goals each year from fiscal year 2005 through fiscal year 2008. The Army National Guard exceeded its goals in fiscal years 2006 and 2008 and fell within the allowable margin of variance for meeting its goals in the other 2 fiscal years.

The Army Has Almost Met Its Overall Growth Goal, and Two Components Have Exceeded Their Annual Goals under the Accelerated Growth Plan

By the end of fiscal year 2008, the Army as a whole had met 99 percent of its overall growth goal, whereas it had initially planned to complete the growth by fiscal year 2013 under the original Grow the Force plan and by 2010 under the accelerated plan. Specifically, the Army’s total end strength at the end of fiscal year 2008 stood at 1,101,020 personnel, and its final end-strength goal under the Grow the Force plan is 1,111,600 personnel.

Under the Army’s accelerated growth plan, the goal for the active Army was to reach an end strength of 547,400 personnel by the end of fiscal year 2010; the active Army ended fiscal year 2008 with a total of 543,645 personnel (see table 1). As table 1 also shows, the active Army exceeded its 2008 goals under both the original and the accelerated growth plans. At the end of fiscal year 2008, the active Army needed to grow only by an additional 3,755 to reach its overall end-strength goal of 547,400 personnel. Officials said that at this rate of growth, the active Army is well on track to reach its overall end strength goal by fiscal year 2010.

The Army National Guard has also had success in growing well ahead of the schedule. By the end of fiscal year 2008, the National Guard had met 100.6 percent of its overall growth goal. As shown in table 1, the goal for the Army National Guard was to reach an end strength of 358,200 personnel by the end of fiscal year 2010 under the accelerated growth plan; however, the Army National Guard ended fiscal year 2008 with a total of 360,351 personnel. Army National Guard officials attributed their ability to exceed growth goals to their successes with recruiting and retaining personnel.

The Army Reserve is not subject to the accelerated plan, but the original plan called on it to grow to 206,000 personnel by the end of fiscal year 2013. By the end of fiscal year 2008, the Army Reserve had met approximately 96 percent of this goal, with an end strength of 197,024. As shown in table 1, the Army Reserve increased its number of personnel by approximately 7,000 by the end of fiscal year 2008, but it still fell slightly short of its 2008 end strength goal of 198,268. Army Reserve officials acknowledged that the Army Reserve has struggled in meeting its annual end-strength goal. They told us that despite the Army’s need to accelerate the growth in personnel in order to reduce the burden of frequent and lengthy deployments, the Army Reserve was not included in the acceleration plans because of the difficulties it was experiencing in meeting its end-strength goals.

Army Components Have Made Progress in Meeting Their Recruiting Goals Since 2005

The Army manages its overall end strength by setting goals for recruiting new personnel and retaining existing personnel. Since fiscal year 2005, when all Army components fell short of their recruiting goals, the components have made progress toward meeting their annual recruiting goals. To help accomplish this, they have increased the size of their recruiting force. As shown in table 2, the active Army met approximately 92 percent of its recruiting goal in fiscal year 2005, while the Army National Guard met approximately 80 percent of its goal and the Army Reserve met approximately 84 percent of its goal. Since fiscal year 2005, all three components have made steady progress toward meeting their recruiting goals. As shown in table 2, the active Army exceeded its annual goal of 80,000 new recruits from fiscal years 2006 through 2008. The Army National Guard met more than 95 percent of its goal in both fiscal years 2006 and 2007 and exceeded its goal in fiscal year 2008. The Army Reserve met approximately 95 percent of its goal in fiscal year 2006 and exceeded its goal in both fiscal years 2007 and 2008.

In working toward achieving its recruiting goals, the Army increased its number of recruiters from 10,271 in fiscal year 2005 to 13,428 in fiscal year 2008, a total increase of more than 30 percent. The number of recruiters also grew within each Army component during this period. For example, the number of recruiters in the active Army grew from 5,454 in fiscal year 2005 to 6,589 in fiscal year 2008, an increase of more than 20 percent. The number of recruiters in the Army Reserve grew by more than 50 percent between fiscal years 2005 and 2008 (from 1,117 to 1,739). For the Army National Guard, the number of recruiters grew by approximately 38 percent during that period (from 3,700 to 5,100) (see fig. 1).

Army Components Met Their Retention Goals in Recent Years

Despite concerns that the increased length and frequency of deployments could cause soldiers to leave the Army, the Army components met their retention goals between fiscal years 2005 and 2008. The active Army uses soldiers’ reenlistments as a measure of retention. The active Army exceeded its retention goals at each experience level every year from fiscal years 2005 through 2008 (see table 3).

Like the active Army, the Army Reserve and the Army National Guard were successful in retaining personnel each year from fiscal years 2005 through 2008. Both of these components use attrition rates—the number of losses from a component during a given period compared to the component’s average end strength during that period—as a measure of retention, striving to keep attrition below an established maximum rate, or ceiling. However, DOD allows a 2 percentage point margin of variance from the established ceiling in assessing whether or not attrition goals have been met. As table 4 shows, the attrition rate for the Army Reserve remained at rates below the ceiling each year from fiscal years 2005 through 2008. The Army National Guard had attrition rates above the ceiling in fiscal years 2005 and 2007, but the rates during these 2 years fell to within the 2 percentage point margin of variance allowed by DOD. The Army National Guard also succeeded in keeping attrition rates below the ceiling in fiscal years 2006 and 2008 (thus exceeding its goals).

Army officials attributed the generally high retention rates among enlisted personnel to their strong commitment to the mission and their pride in the military service. Also, several Army officials said that the ongoing conflicts in Iraq and Afghanistan provide soldiers with opportunities to take advantage of their training and to put their combat skills to use, thus increasing satisfaction with their Army careers. Focus groups conducted with soldiers returning from 15-month combat tours and their families from December 2007 through February 2008 also found that soldiers and their family members expressed great pride in their service, and soldiers indicated that they were doing what they had originally joined the Army to do.

At the same time, deployments that are too long or too frequent may start having an adverse effect on retention, as pressure on personnel and their families increases. Participants in the focus groups reported that 15-month deployments are too long and 12-month dwell time is too short to fully integrate with family and prepare for the next deployment. Top Army leaders acknowledge the strain on soldiers and families, and the Army has recently reduced deployments to 12 months, followed by 12 months at home for active-duty soldiers. Officials we interviewed said that the accelerated rate of growth in Army end strength is helping them move toward the goal of shorter deployments and longer dwell time.

The Army Has Dramatically Increased Bonus Expenditures but Does Not Use Available Research to Calculate the Most Cost-Effective Bonus Amounts

Since fiscal year 2005—the last year in which the Army failed to meet its end-strength mission—it has dramatically increased expenditures for enlistment and reenlistment bonuses. However, while the Army has completed or contracted for extensive analysis of the effectiveness of various recruiting tools, it has not integrated the results of its research to calculate the most cost-effective bonus amounts. That is, the Army cannot determine whether or not it is paying more in bonuses than it needs to pay. Also, these bonuses are not always targeted as precisely as they could be. The Army’s process for determining whether to award a bonus to a specific occupational specialty is based on a number of factors, including whether the Army is having difficulty recruiting for and needs to fill training slots for the specialty and whether the occupation’s fill rates indicate shortages. (Fill rates are the rates at which occupational specialties are filled in relation to the existing number of vacancies.) The Army’s current system results in (1) soldiers in occupations of varying priority or responsibility sometimes getting the same bonus amounts; (2) all soldiers who are eligible for and apply for reenlistment while they are in Iraq, Afghanistan, and Kuwait receiving bonuses, regardless of their occupational specialties; and (3) soldiers in the same occupational specialties getting different bonus amounts depending on which component they join. After we had completed our audit work, OSD and the Army reported that the worsening U.S. economy had resulted in their ability to decrease bonus amounts and the numbers of occupations offered bonuses. In March 2009, they stated that in this fiscal year, they had contracted for analyses to be done on the effectiveness of cash incentives and on bonus prediction models.

The Army Has Substantially Increased Its Expenditures on Bonuses

In fiscal year 2005, the Army’s total enlistment and reenlistment bonus expenditures stood at approximately $1.2 billion; in fiscal year 2008, they had increased by almost 75 percent, to approximately $2.0 billion. Bonus expenditures also grew within each of the Army’s components.

Active Army

As figure 2 shows, the active Army spent $165.9 million on enlistment bonuses in fiscal year 2005; by fiscal year 2008, it had almost tripled its enlistment bonus expenditures, spending approximately $466.7 million. The active Army also spent $505.6 million on reenlistment bonuses in fiscal year 2005; by fiscal year 2008, it had increased these expenditures by more than 35 percent, to $689.9 million.

The Army Reserve has also significantly increased its spending on bonuses to soldiers since fiscal year 2005. As figure 3 shows, the Army Reserve spent $59.6 million on enlistment bonuses in fiscal year 2005. By fiscal year 2008, it had almost tripled this amount, to $169.7 million. Additionally, the Army Reserve spent $63.9 million on reenlistment bonuses in fiscal year 2005, nearly doubling its fiscal year 2008 expenditures, to $121 million.

The Army National Guard almost tripled its spending on enlistment bonuses from $141.8 million in fiscal year 2005 to $392.1 million in fiscal year 2008. It also increased total reenlistment bonus expenditures from $235.1 million in fiscal year 2005 to $375.8 million in fiscal year 2007, before curtailing reenlistment bonus spending for fiscal year 2008 (see fig. 4).

Army officials stated that the use of incentives, such as bonuses, is an integral part of a comprehensive recruiting and retention strategy. OSD officials said that the increase in bonus expenditures over the past several years has been necessary to overcome a recruiting environment made difficult by factors such as the declining propensity of youth to enter the military service, the decreasing number of youth who meet the Army’s entrance standards, and the reality of recruiting during a time of overseas military conflicts. Up until now the Army has been able to dramatically increase the amounts it spends on enlistment and reenlistment bonuses. However, the current level of bonus expenditures may prove difficult to sustain in the tighter fiscal environment expected in the next several years. Also, rising unemployment rates in the civilian sector may make it easier to attract recruits and retain soldiers.

The Army Has Not Used Research to Calculate What Bonus Amounts Would Be Most Cost- Effective

While the Army has conducted extensive research on the use of cash and other incentives such as choice of branch or graduate school, this research has been focused on comparing different incentive plans. It has not been directed at determining the most cost-effective bonus amounts. The Army therefore cannot determine whether or not it is paying more than it needs to pay in enlistment and retention bonuses. DOD Directive 1304.21 establishes policies for administering enlistment and reenlistment bonuses for military servicemembers, and DOD Instruction 1304.29 provides guidance on implementing these policies. These directives state that bonuses should be used in situations in which less costly methods have proven inadequate or impractical. DOD Directive 1304.21 further states that it is wasteful to authorize the use of financial incentives when less costly but equally effective incentives are available. In determining what bonus amounts to offer active-duty enlistees, the Army has established seven different amount levels based on the occupation that the enlistee would fill. (See table 10 in app. II for a listing of the bonus amounts.) Bonus levels 1 through 7, as defined by the U.S. Army Recruiting Command, have been adjusted over the years. The current amounts range from $2,000 to $35,000, depending on the bonus level under which an occupation falls and the length of the enlistment contract signed by the recruit. For example, a recruit who enters the active Army in a level 3 occupational specialty and signs a 2-year contract would receive an enlistment bonus of $3,000. A recruit who enters the active Army in a level 1 occupational specialty—the highest bonus category—and signs a 6-year contract would receive an enlistment bonus of $35,000.

Although a substantial body of research exists on how analysts can estimate the extent to which enlistment and reenlistment rates for particular segments of the force are likely to be affected by alternative uses of resources, the Army has not integrated this research into its decisionmaking process in setting the most cost-effective bonus amounts. Accordingly, officials told us that the Army is not able to determine whether it is paying more than it needs to and therefore getting a cost-effective return on its investment. In light of the tighter fiscal environment expected in the next few years, it will become more important to determine whether it is paying bonuses to persons who would have joined or stayed in the Army without them. In fact, after we had completed our audit work, the Army stated that in fiscal year 2009, it had begun to decrease the number of occupational specialties that receive bonuses and the amounts spent for this purpose.

The Army’s Process Leads to Cases in which Occupations of Different Priority Levels Receive Similar Bonuses and Bonuses Vary by Component

To determine the occupational specialties for which active-duty enlistees should be offered enlistment bonuses, the Army has formed an Enlisted Incentives Review Board—made up of officials from the Army Office of the Deputy Chief of Staff, the U.S. Army Recruiting Command, and the U.S. Army Human Resources Command—which meets four times a year. Occupational fill rates, or the percentages of an occupation’s positions that are filled, are a major factor in the board’s determination of whether to offer enlistment bonuses for a particular occupational specialty. However, other factors are also considered, such as the Army’s future planned growth, decreases in the need for an occupational specialty, the success of any previously offered bonuses in attracting the required numbers of enlistees, and the availability of training slots. The Army has a list of priority occupations that is compiled by field commanders when they assess their units’ personnel needs, but given the various factors considered by the Enlisted Incentives Review Board, situations arise in which some priority occupations do not receive bonuses or in which different occupations with varying degrees of responsibility are awarded the same amount. For example, of the 35 occupational specialties on the Army’s priority list, 9 were not designated to receive enlistment bonuses at the time of the June 2008 Enlisted Incentives Review Board meeting. However, at the same meeting the Enlisted Incentives Review Board identified 52 nonpriority occupational specialties that would be offered some level of bonus. (See table 11 in app. II for a list of occupational specialties that were selected to receive bonuses.)

The board’s system for determining enlistment bonuses also sometimes results in cases in which occupations with varying degrees of responsibility receive the same bonus. For example, in June 2008, Food Service Specialists were eligible to receive the same bonus as Explosive Ordnance Disposal Specialists, even though the Explosive Ordnance Disposal Specialist was listed as a priority occupational specialty and was tasked with more dangerous responsibilities. Similarly, Infantrymen, an occupational specialty listed by the Army as a priority specialty, received the same level of enlistment bonus as Army band musicians. Army officials told us that these decisions were based on factors such as the difficulty of recruiting for some occupations and the availability of training slots for them. DOD guidance allows the services to grant bonuses to occupations that the services have not deemed “priority” but that are experiencing shortages or for which total accession objectives have not been met.

Like enlistment bonuses, reenlistment bonuses are not always targeted at priority occupational specialties. For example, in fiscal years 2007 and 2008, the active Army awarded tax-free reenlistment bonuses of up to $15,000 to all soldiers, regardless of occupational specialty, who were deployed to Afghanistan, Iraq, and Kuwait while they were in theater. Army officials reported that in fiscal year 2007, 15,984 soldiers received these reenlistment bonuses, which averaged $10,700. As of April 2008, 4,483 soldiers had received these bonuses during fiscal year 2008; the average 2008 bonus was $12,700. Army officials linked these tax-free reenlistment bonuses to the Army’s ability to attain high levels of retention. For example, they reported that recently deployed units or units currently deployed to Iraq, Afghanistan, and Kuwait have reenlistment rates at 110 to 120 percent of their yearly goals.

Furthermore, because the Army’s components manage their enlistment bonus programs separately, soldiers in the same occupations might receive bonuses of different amounts, depending on the component in which they serve. One prominent difference among the bonuses offered by Army components is the difference between what is offered to an active- duty enlistee and an enlistee who enters under the National Guard’s Active First incentive program. All Active First recruits get a bonus of at least $20,000 if they sign up for 2 years in the active Army; $30,000 if they sign up for 3 years; and $40,000 if they sign up for 4 years. Because all Active First enlistees are eligible for bonuses, an enlistee in a specific occupational specialty may find that he or she is eligible for a bonus for joining the Active First program but not eligible for a bonus for joining the active Army. According to data provided by the U.S. Army Recruiting Command, such differences in bonuses offered by the Army’s three components resulted in a divergence in the average dollar amount of bonus per enlistee in fiscal year 2008. As table 5 shows, bonuses ranged from $18,304 for an active-duty enlistee to $36,966 for an enlistee in the National Guard’s Active First Program.

The Army Has Fallen Short of Its Quality Goals and Has Taken Steps to Expand Its Recruiting Market

The Army components have not consistently met their quality goals for the percentage of new recruits who have high-school diplomas and who score in the upper half on the AFQT. The Army estimates that only 3 out of 10 youth aged 17 to 24 are qualified to join the Army without a waiver, even including those who have low educational credentials or low aptitude. This has led the Army to experiment with some initiatives to expand its recruiting market to individuals who before now might have been considered ineligible for service, for example recruits who do not meet standard entrance requirements for reasons such as body fat and age requirements. While its programs to expand the recruiting market appear promising, the Army has not yet had time to collect long-term data on the performance of individuals admitted through these programs.

Army Components Have Not Consistently Met Quality Benchmarks for Recruits with High-School Diplomas and Scores on the Upper Half on the AFQT

In fiscal years 2005 through 2008, the Army components did not consistently meet the quality benchmarks set for the services by DOD. Historically, DOD has used two primary measures to identify quality recruits: possession of a high-school diploma and a score in the upper half on the AFQT. These benchmarks require that at least 90 percent of recruits each year have a high-school diploma, at least 60 percent score in the upper half on the AFQT, and no more than 4 percent score in the bottom 30 percent on the AFQT. In fiscal year 2005, none of the Army’s components met DOD’s 90 percent benchmark for recruits with high- school diplomas (see table 6). The active Army and the Army Reserve met the benchmark for 60 percent of enlistees scoring in the upper half on the AFQT, but the Army National Guard did not. Since fiscal year 2005, only the active Army has met the benchmark for 60 percent of its recruits scoring in the upper half on the AFQT. The Army National Guard has consistently met the high-school diploma benchmark since fiscal year 2005, while the active Army and the Army Reserve have not. In fiscal years 2006 through 2008, 91 percent of the Army National Guard’s recruits had high-school diplomas.

All three components have met DOD’s benchmark that no more than 4 percent of enlistees score in the bottom 30th percentile on the AFQT, with one exception: in fiscal year 2005, 5 percent of the Army National Guard’s recruits were in this category.

The Army Has Implemented Initiatives to Expand Its Recruiting Market

Given the challenges the Army faces in meeting DOD quality benchmarks and because the Army estimates that only about 3 out of 10 youth aged 17 to 24—including those who have low educational credentials or low aptitude—do not need a waiver to join the Army, it has recently introduced initiatives to assess the quality of potential recruits by other measures and to expand its traditional market for recruiting. The Army currently estimates that of the approximately 32 million young people in the United States aged 17 to 24, only 9.7 million (or approximately 3 out of 10) are qualified without requiring a waiver for medical conditions, conduct issues, or administrative reasons such as the number of dependents. However, the Army emphasizes that some of these fall into a category subject to a DOD percentage cap restriction for enlistment because they have AFQT percentile scores below 31 or lack high-school diplomas. Therefore, the Army estimates that only about 2 out of 10, or 6.2 million, can be considered fully qualified and eligible to enlist at any given time (see fig. 5). Each year, the Army tries to recruit approximately 176,000 of these individuals, meaning that the Army needs almost 3 percent of this population to enlist.

Individuals fall outside of the Army’s target market for recruiting for a variety of reasons, including physical factors (such as body fat) or educational factors (such as not having a high-school diploma). To help meet its recruiting goals, however, the Army has targeted its efforts to some individuals who do not fully meet its entrance criteria, especially those who are over the body fat limit, do not possess high-school diplomas, or are ages 41 and 42 but fully qualified otherwise.

The Army has implemented four initiatives to expand its recruiting market. One of these focuses on overweight individuals. The Army has traditionally rejected individuals whose body fat exceeds a prescribed limit, but it has now begun to admit individuals who, although their body fat exceeds the limit, have other characteristics that have been found to be predictors of success in the Army. To screen for these characteristics, the Army has developed an Assessment of Recruit Motivation and Strength test, which assesses an individual’s physical fitness and motivation and identifies promising individuals who would otherwise have been denied entry. The Army has also implemented a second and third program to target individuals without high-school diplomas. In 2005, the Army implemented a Tier Two Attrition Screen, used to screen individuals without high-school diplomas for characteristics such as motivation and mental and physical fitness—indicators linked to relatively low rates of attrition. In addition to the Tier Two Attrition Screen, the Army Preparatory School was opened in August 2008 to help promising individuals without high-school diplomas earn General Educational Development (GED) certificates in 4 weeks and to prepare them for basic training. The school is open to youth without high-school diplomas who have scored in the upper half on the AFQT, who need no other waivers, and who have passed the Tier Two Attrition Screen. The Army also implemented a fourth initiative to expand the recruiting market by increasing the maximum recruitment age from 40 to 42. According to the Army, individuals in this category often bring a range of experiences that can benefit both the Army and their fellow soldiers. This expansion of the pool provides a larger segment of the population with a chance to serve.

As table 7 shows, the active Army and the Army Reserve have accessed several thousand recruits through these initiatives to expand its recruiting market. However, many of the recruits who entered through these programs have not yet completed their first enlistment terms, and the Army is still evaluating each program’s long-term impact and effectiveness.

The Army has accessed nearly 1,000 recruits in fiscal year 2008 as a result of the Assessment of Recruit Motivation and Strength program, and the Army Reserve has accessed 366. Initial findings from this program indicate that females who exceeded the body fat standards but were allowed to enlist as a result of passing the Assessment of Recruit Motivation and Strength test had attrition rates similar to those of fully qualified females; attrition among males who exceeded the body fat standards but passed the test was slightly higher compared to the attrition of fully qualified males. However, these recruits had not completed their terms of enlistment at the time of the study, and the Army plans to conduct analyses with a larger number of subjects in the future. In fiscal year 2008, the Army accessed 6,580 soldiers for the active Army and nearly 1,000 for the Army Reserve through the Tier Two Attrition Screen, and initial program evaluation results show that these recruits had attrition rates higher than those with high-school diplomas but lower than those with GEDs. However, because this initiative was first implemented in 2005, the Army has not yet gathered sufficient data to prove the long-term success of this program in predicting recruits’ attrition behavior. From August 2008, when the Army Preparatory School first opened, to the end of fiscal year 2008, the Army also reported graduating and accessing 362 new recruits in the active Army and 41 new recruits in the Army Reserve entering through this program, but performance in the long term has yet to be assessed.

The Army Has Continued to Grant Conduct Waivers for New Recruits and Analyzes the Outcomes of Recruits Entering with Conduct Waivers

The Army has continued to grant conduct waivers to recruits who do not meet some of the Army’s entrance standards for reasons such as prior criminal misconduct. In fiscal year 2008, approximately 12 percent of new recruits admitted by the active Army had conduct waivers, compared with approximately 6 percent in the Army Reserve and 3 percent in the Army National Guard. According to the Army, enlistment waivers offer opportunities to individuals who have the potential to be good soldiers but who may not otherwise have been given a chance to serve. Some officials also acknowledged that waivers are necessary, given the Army’s efforts to grow and the ongoing challenges in the recruiting environment.

Through fiscal year 2008, the Army granted conduct waivers for various types of offenses: felonies, serious or minor misdemeanors, and serious or minor traffic offenses. Army data show that waivers for serious misdemeanors comprise the largest category of conduct waivers granted by all components in fiscal year 2008, followed by waivers for felonies for the active Army and the Army Reserve and by waivers for minor traffic offenses for the Army National Guard. Waivers for felonies—the most serious type of offense that may qualify for a waiver—comprised approximately 13 percent of all conduct waivers for the active Army, 14 percent for the Army Reserve, and 10 percent for the Army National Guard. We reviewed the files of all of those personnel accessed by the active Army or Army Reserve in fiscal year 2007 with waivers for felony convictions. Appendix III provides examples of the felonies committed by these recruits. Overall, however, the percentage of recruits entering with felony waivers was small. For example, recruits with felony waivers comprised less than 1 percent of overall accessions to the active Army and less than 2 percent of overall accessions to the Army Reserve and the Army National Guard.

In fiscal year 2006, the Army began to collect and analyze data on the performance outcomes of recruits with conduct waivers. DOD Instruction 1304.26 states that the underlying purpose of moral character standards is to minimize the enlistment of persons who are likely to become disciplinary cases. Initial analyses conducted by the Army and the RAND Corporation have shown that, while those with conduct waivers tend to perform as well as those without conduct waivers, they are more likely to be separated for adverse reasons, such as behavioral issues.All of these studies, however, examined accessions with waivers from fiscal years 2002 through 2007, years when, according to Army officials, the waiver data were subject to certain data reliability problems, including the overcounting of conduct waivers and the miscoding of some misdemeanors as felonies. Since that time, the Army has made improvements to the waiver data, and results of any forthcoming studies should provide a more reliable assessment of the conduct waiver population.

At the Army’s request, in 2009, RAND will assess whether the presence of soldiers with waivers adversely affects the behavior of other members of their units. In addition, RAND plans to update its analysis of how recruits with conduct waivers are performing. An Army official told us that the Army’s own analyses and the work undertaken by RAND provide a comprehensive view of the Army’s waiver policies and a mechanism for identifying the need for any changes. According to Army officials, the administrative cost of the waiver review process is “negligible.” They added that the primary cost metric used to measure the return on investment for enlistees with waivers is comparing the attrition rates of those with waivers to the rates of those without waivers. They stated that in 2006, the Army found that there were no significant differences in attrition rates between these two groups. However, Army officials also acknowledge that the findings regarding the performance of those with and without conduct waivers are “mixed.” As stated earlier, the Army has found evidence that some enlistees who entered the Army in fiscal year 2007 were more likely to be separated early for adverse reasons. Because the waiver process involves several different administrative layers, the cost of this process may be found to be more than originally estimated. Also, because research results on the performance of enlistees with and without conduct waivers are not definitive, the issue of whether granting these waivers is cost-effective is not yet clear. Completed and planned work on waivers does not consider the costs associated with the Army’s separation of soldiers who were granted conduct waivers and were later separated early for adverse reasons. Studying these issues is important, given that the recruiting and training of individuals involves substantial expenditures on the part of the Army. After our audit work was complete, Army officials told us that in February 2009, the Army Audit Agency had begun a study of waiver policy.

The Army Lacks Support to Gauge the Effect on the Officer Corps of Its Actions to Alleviate Shortages

In part as a result of the increased demand for officers created by Grow the Force and Army Modularity efforts, the Army is faced with shortages of captains, majors, and lieutenant colonels. To find ways to address these shortages, the Army contracted a study to predict the appeal to junior officers of different incentive packages. This study compared incentive packages that ranged in cost-per-person from $14,000 to $165,000. Despite this research, it is not clear how the package ultimately offered to Army officers represented the most cost-effective one from the standpoint of the Army or whether the Army could have achieved the same results with less money. Also to alleviate shortages in its officer force, the Army has recently promoted officers at above-average rates, reduced time-in-service requirements for promotion, and suspended a performance indicator for its junior officers that it had previously used to identify the best- performing officers relative to their peers. These actions have had an immediate effect on alleviating some of the shortages, but the Army has not yet assessed whether the short-term measures it has taken will have long-term effects on its officer corps in the future.

The Army Has Experienced Shortages of Captains, Majors, and Lieutenant Colonels

The Army’s efforts to grow the force have exacerbated preexisting shortages in the officer corps, and the Army projects that some shortages will continue until fiscal year 2018. At the end of fiscal year 2008, the Army had a shortage of 1,208 captains; 3,112 majors; and 529 lieutenant colonels. The Army had an excess of captains in fiscal year 2005, but since then it has fallen short of its requirements for captains. The Army has had a shortage of majors since at least 2003, and this shortage more than doubled from fiscal years 2003 through 2008. Likewise, there has been a shortage of lieutenant colonels since at least 2003. According to Army officials, shortages have grown because the Army’s modular structure requires more midlevel officers per brigade, and the Army has increased its requirements for officers in general as part of its Grow the Force initiative. (See fig. 6 for the numbers of Army requirements for captains, majors, and lieutenant colonels compared with the numbers of these officers the Army had in its operating strength from fiscal years 2003 through 2013.)

As figure 6 shows, the Army projects the shortages of captains, majors, and lieutenant colonels to continue. Our analysis of these projections shows that by fiscal year 2012, the supply of captains will have caught up with the demand. The shortage of majors, however, is projected to remain more severe and to continue beyond 2013 with no significant change in the operating strength of majors, despite growing authorizations. According to projections, the shortage of lieutenant colonels will have lessened but also will continue through the end of fiscal year 2013.

Aside from the general shortage of officers at these two ranks, officers are in short supply in particular career areas. When the rate at which a career area, or branch, is filled falls below 85 percent, the Army considers the branch to have a critical shortage. On the basis of calculations performed on Army data, Army officials believe that there are several areas where the Army does not have enough officers to meet current demand, including transportation, military intelligence, foreign area expertise, and the special branches. (See app. IV for a list of branches with fill rates below 85 percent.)

The Army Has Offered Incentives to Address Critical Shortages of Midlevel Officers but Lacks Data to Assess Their Effectiveness

The Army initiated an incentive program for captains and continues to offer incentives to cadets just prior to their commissioning. DOD Directive 1304.21 states that bonuses should be awarded only when less costly methods have proven inadequate or impractical and, similarly, that it is wasteful to authorize the use of financial incentives when less costly but equally effective methods are available. In order to fill immediate needs for captains, the Army offered a “menu of incentives” to 23,053 captains in branches with fill rates below 90 percent who began service as officers between 1999 and 2005. From September 2007 until March 2008—phase one of this program—the Army offered these captains a choice of five incentives in return for taking on extended service obligations: (1) a cash bonus of up to $35,000; (2) a graduate education; (3) a choice of branch; (4) a choice of location; or (5) military school. In phase two, from April 2008 until November 2008, the Army did not offer captains the choice of branch or choice of location, and it limited the military school option to language training. Captains were offered these incentives in exchange for committing to at least 3 additional years of active-duty service. Of the 15,317 captains who accepted one of these incentives, 94.6 percent chose the cash bonus (see table 8). According to the most recent Army estimate, the cash bonus has cost the Army $443.5 million; based on that estimate, the average bonus was $30,488.

Although 15,317 captains have taken advantage of one of these incentives, the Army did not collect data that would allow it to determine the most cost-effective amount for the cash bonus. Also, despite the requirement to use less costly measures first, the Army did not determine whether offering less costly measures—for example, offering the menu of incentives without the cash bonus option or the choice of graduate school—would have similar results. Before selecting this incentive package, the Army contracted with Chadwick, Martin, and Bailey in 2006 to explore different options. The contractor conducted an online questionnaire involving about 2,000 officers who had entered the Army in 2003, 2004, and 2005. The questionnaire asked the officers to choose among different incentive packages, which included incentives that ranged in cost from $14,000 per person to $165,000 person. The incentive costing the least involved offering the officer his or her branch or functional area of choice, and the incentive costing the most involved offering the officer a choice of graduate school and a degree from a list of options. While the study predicted the likely results of the Army’s offering of different incentive packages, it did not recommend a package that represented the most cost-effective use of Army resources, and it is not clear how the Army selected the incentive package it ultimately offered its officers. Because the Army did not use such data to determine which incentives would be most cost-effective, it cannot provide evidence that its policy is in line with DOD Directive 1304.21. Without such data, the Army cannot determine how best to allocate the money it spends on incentives to achieve maximum effect.

The Army has also attempted to alleviate what it expects to be a future demand for captains and majors by offering a precommissioning incentive to cadets at the United States Military Academy and in the Reserve Officer Training Corps. Under this incentive program, in return for a commitment to at least 3 additional years of service, cadets are offered (1) a chance to attend graduate school, (2) a choice of branch, or (3) a choice of location. This program did not include the option of a cash bonus but did offer cadets a graduate school education, which the Chadwick, Martin, and Bailey study had estimated would cost $165,000 per person, the most expensive of the incentives examined. When cadets are first commissioned, they are obligated to serve 3 to 5 years, depending on whether they were accessed through the Military Academy, the Reserve Officer Training Corps, or the Officer Candidate Schools. By adding 3 years to their initial obligations, officers who participate in this program will be required to stay in the Army until they have been captains for several years. Some, particularly if they choose the graduate school option, will become majors before completing their service obligations. Army officials have stated that participation in this precommissioning program to date has been promising; they believe the program will significantly increase the retention of officers at the rank of captain and beyond and close the future gap without the need for additional retention incentives for officers. According to the Army’s calculations, the program will increase the percentage of officers accessed in 2007 and 2008 who will complete 8 years of service from 47 percent to 66 percent. Table 9 provides information on the number of officers who participated in the precommissioning incentive program.

As of November 2008, the Army had not implemented any programs specifically targeted at majors or lieutenant colonels. An Army official stated that the Army has not offered incentives to majors or lieutenant colonels because officials do not believe there is a retention problem with majors or lieutenant colonels.

The Army Has Not Yet Assessed the Effects on Its Officer Corps of Short- Term Actions to Alleviate Shortages

In addition to offering incentive programs, the Army has been promoting officers at faster-than-recommended rates and reducing time-in-service requirements. However, the Army has not yet determined whether these actions will have a negative effect on its future officer corps. Because the Army operates in a closed system, it can only promote from within; this limits the actions the Army can take and makes it important to identify trends that may need to be addressed as early as possible. House Report 96-1462 on the Defense Officer Personnel Management Act describes the complexity of the promotion system and emphasizes that any change to one variable affects the others. The report concludes that in order to maintain a high-quality officer corps, changes to the system must be made very carefully. While the Army provided data regarding the quality of officers at the time of their accession—such as a bachelor’s degree or Scholastic Aptitude Test score—the Army had no data that could demonstrate whether the performance of its officers had changed over time or whether actions it had taken, such as promoting at higher rates, would have an effect on the officer corps in the future.

Since 1992, in order to meet the increased demand for officers, the Army has dramatically increased its promotion rates for officers, exceeding the benchmarks set forth in 1980 in Senate Report No. 96-375, which accompanied the Defense Officer Personnel Management Act. In order to maintain the rank structure outlined in the act and simultaneously provide officers with rewarding career tracks, the established promotion rates (which are lower as officers proceed up the ranks)—as well as the “up-or-out” system—guide the Army in promoting the best-qualified officers to higher ranks, with the understanding that some fully qualified officers will not be promoted. The Secretary of the Army issues guidance defining what the Army considers to be important experience, and the Deputy Chief of Staff for Personnel determines which officers are to be considered for promotion. The Army promotes only officers who have been determined by promotion boards to be fully qualified to serve at the next higher rank.

The Army expects to continue this practice of promoting officers at certain ranks at rates higher than recommended benchmarks through fiscal year 2010. Figure 8 shows comparisons between promotion rates established in Senate Report No. 96-375 and the Army’s actual or expected promotion rates in fiscal years 2004-2010 for captains, majors, lieutenant colonels, and colonels.

While promoting at these high rates, the Army has reduced the time that it requires officers to remain at certain ranks before they are promoted. For example, as of November 2008, the Army was promoting officers to the rank of captain after they had served 3 years and 2 months as lieutenants, while the other services were promoting officers to captain or the equivalent rank only after they had served for 4 or more years. Likewise, as of November 2008, the Army had reduced its time-in-service requirement for promotion to major to 9 years of service, while the other services were requiring between 9 years, 8 months; and 10 years, 2 months of service. While shortening its time-in-service requirements for promotion to captain, the Under Secretary of Defense suspended the requirement that first lieutenants serve 2 years before being promoted to captain, shortening the requirement to 18 months. For all other promotions, the Army’s requirements are within those established in Title 10 of the United States Code, which call for officers to serve 18 months as second lieutenants and 3 years at the rank of captain, major, and lieutenant colonel before being considered for promotion.

In addition to reductions in the standard time-in-service requirements for promotion, early promotions for majors and lieutenant colonels are on the rise. Early promotions are given to officers who, although they have less time in service than the officers identified to be considered for promotion in a particular year, are judged to be clearly better choices for promotion. Early promotions do not increase the number of officers promoted; rather, the Army draws from officers having 1 fewer year of experience to select candidates for promotion. From fiscal years 2006 through 2008, early promotions to major rose from 7.5 percent to 12.5 percent. Likewise, from fiscal years 2006 through 2008, early promotions to lieutenant colonel rose from 7.4 percent to 14.8 percent. The Defense Officer Personnel Management Act requires authorization by the Deputy Secretary of Defense if early promotions account for over 10 percent of promotions, and the Army has acquired this authorization. The act also requires that early promotions not exceed 15 percent of all promotions, and the Army has stayed within this benchmark. Early promotions to lieutenant colonel are moving more majors up the ranks faster. However, although this helps to prevent shortages of lieutenant colonels, it exacerbates the shortage of majors.

As House Report 96-1462 stated, officer management is a complex system, and any changes must be made carefully. While the Army moves away from the legislative benchmarks and changes previous standards to meet the current demands for officers, it has not yet assessed the long-term effect of these actions on the officer corps. As a result, the Army is missing critical data to inform its decisions and to allow it to identify and address any trends in the officer corps while taking appropriate force-shaping actions.

Conclusions

The Army has been successful in finding innovative ways to meet its goals for increasing end strength. However, its expenditures for bonuses and incentives have not been as effectively targeted as they could be. While the Army has access to various studies and data, it is not clear that the Army has used this information to set the most cost-effective bonus amounts. For example, although its expenditures for enlistment and reenlistment bonuses have grown by about 75 percent, the Army does not know whether these bonuses are set at amounts that are sufficient to meet its enlistment and reenlistment goals and at the same time do not result in excessive payments to achieve these results. Initial results of the effect of admitting individuals who do not meet the Army’s standard eligibility requirements appear positive, and the Army has begun efforts to analyze the performance outcomes of recruits with conduct waivers. While the studies conducted by the Army, including the one it has contracted out to RAND, may provide useful information on the performance of those admitted with conduct waivers during a certain period of time, it will be important for the Army to continue monitoring this population closely, including assessing the cost-effectiveness of investing in those who require conduct waivers in order to determine whether it is making prudent use of its valuable resources in recruiting and training these individuals and whether any modifications to its waiver policies are needed. This is especially the case given that, even though data show that recruits with conduct waivers are strong performers, other evidence indicates that they are more likely to exhibit disciplinary problems and to be separated for adverse reasons than those who do not need conduct waivers.

Faced with a wartime environment, restructuring efforts that result in the need for additional officers, and a system for developing leaders that requires years of forward planning, the Army has been required to promote officers at a much faster rate than it has in the past and to offer new incentives to retain officers. While there is no easy solution to the shortage of midlevel officers, there are trade-offs involved with each action to alleviate the shortage. Without using research that will allow the Army to assess the cost-effectiveness of its new incentives and the metrics to identify trends to help shape the force appropriately, the Army will not be in a position to make informed decisions about the choices it makes and the risks it assumes as it manages the future officer force.

Recommendations for Executive Action

We recommend that the Secretary of Defense direct the Secretary of the Army to take the following four actions: To enhance its existing processes to recruit and retain sufficient numbers of enlisted personnel and to avoid making excessive payments to achieve desired results, build on currently available analyses that will enable the Army to set cost-effective enlistment and reenlistment bonuses.

To enable the most efficient use of recruiting resources, collect data on the cost-effectiveness of the Army’s conduct waiver polices—including costs associated with the waiver review and approval process and with future separations of soldiers with conduct waivers for adverse reasons— and use these data to inform the Army’s waiver policies.

Should the Army decide to offer incentives to officers in the future, build on currently available analyses that will enable the Army, with the direction and assistance of the Secretary of Defense, to set cost-effective bonus amounts and other incentives.

To enable the Army to make informed decisions regarding the management of its officer corps over time, track—and if necessary correct—any effects that its actions to alleviate shortages may have on the officer corps, particularly in cases in which the Army has deviated from benchmarks established in the Defense Officer Personnel Management Act.

Agency Comments and Our Evaluation

We provided the Department of Defense with a draft of this report for review and comment. In response to our draft, DOD concurred with the first three recommendations and partially concurred with the fourth. Regarding our recommendation that the Army conduct further study on the cost-effectiveness of enlistment and reenlistment bonuses, DOD stated that in February 2009, it had contracted for a study that will cover all the military services and is entitled “Recruiting and Retention Effectiveness of Cash Incentives.” DOD expects to receive the first draft of this study in June 2009. Regarding our recommendation that the Army collect and use data on the cost-effectiveness of its waiver policies, DOD stated that the Army Audit Agency had begun an audit in February 2009 of the Army components’ granting of enlistment waivers. In response to our recommendation that the Army consider the cost-effectiveness of any future incentives offered to its officer corps, DOD concurred, stating that DOD requires the military services to provide a detailed business case before it grants the services the authority to employ a retention bonus. In response to our recommendation that the Army track the effects of its short-term actions to alleviate shortages on its officer corps, DOD partially concurred, stating that the DOPMA guidelines are not intended to serve as fixed mandates. We agree and state this in our report. However, we continue to believe that if these guidelines are no longer valid, the Army should monitor the effect of not maintaining these benchmarks in managing its future officer corps. DOD’s comments in their entirety appear in appendix V.

We are sending copies of this report to the appropriate congressional committees. This report will be available at no charge on GAO’s Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3604 or by e-mail at 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 the report are listed in appendix VI.

Appendix I: Scope and Methodology

To assess the Army’s progress in growing the force and identify strategies that the Army has used to accomplish this progress, we obtained and analyzed data on the actual and proposed end strength for the Army as a whole, as well as for each component. Specifically, we reviewed the Army’s original and accelerated Grow the Force plans to identify proposed end strength numbers for each fiscal year of the plans. For the original plan, this included fiscal years 2007 through 2013; for the accelerated plan, this included fiscal years 2007 through 2010. We obtained information from the Army’s Office of the Deputy Chief of Staff for Programs on the actual end strength that the Army had achieved in fiscal years 2007 and 2008 and compared the proposed end strength to the actual end strength achieved. Further, to describe the extent to which the active Army, the Army National Guard, and the Army Reserve have met their target recruiting and retention goals for fiscal years 2005 through 2008, we obtained data on these metrics from the Office of the Undersecretary of Defense for Personnel and Readiness.

To determine the extent to which the Army is directing the growth in its enlisted force to areas of most critical need, we obtained data from the Army’s Office of the Assistant Secretary of the Army, Financial Management and Comptroller, on how much the components spent on enlistment and reenlistment bonuses given to Army recruits and soldiers for fiscal years 2005 through 2008. To determine how the Army identifies priority occupational specialties and which ones should be awarded bonuses, we interviewed officials from the U.S. Army Human Resources Command; the U.S. Army Recruiting Command; and the Army’s Office of the Deputy Chief of Staff for Personnel, Enlisted Career Systems Division. We also observed two working sessions of the Enlisted Incentives Review Board. We reviewed data provided by the members of that Board, as well as other documents showing fill rates, recruiting goals, and bonus levels for the various enlisted occupational specialties.

To determine the extent to which the Army is maintaining the quality of its enlisted force, we obtained and reviewed data describing the extent to which the active Army, the Army National Guard, and the Army Reserve had met DOD’s quality benchmarks for fiscal years 2005 through 2008. We also reviewed the estimates made by the Army and others to determine the size of the target recruiting market and discussed the Army’s methodology in applying the conclusions reached with knowledgeable Army officials. We also obtained data on active Army and Army Reserve programs to expand the youth target market population from the U.S. Army Recruiting Command. Additionally, we obtained information on the numbers and types of enlistment waivers granted by the active Army, the Army Reserve, and the Army National Guard in fiscal years 2005 through 2008. Types of enlistment waivers include conduct waivers, drug and alcohol waivers, administrative waivers, and medical waivers. The U.S. Army Recruiting Command provided data on waivers granted to recruits enlisting into the active Army and the Army Reserve. The National Guard Bureau provided data on waivers granted to recruits enlisting into the Army National Guard. However, the U.S. Army Accessions Command holds responsibility for maintaining these data for all components, and waiver information stored in the U.S. Army Accessions Command’s database originates and is entered at Military Entrance Processing Stations. After interviewing relevant officials from the U.S. Army Recruiting Command, we determined that the waiver data from fiscal years 2005 through 2007 had limitations that precluded us from presenting these data in our report. Among the problems cited by officials were the data system’s failure to capture all waivers for recruits with multiple waivers, the overcounting of other waivers, and the miscoding of some misdemeanors as felonies. We determined that the Army had adequately addressed these problems for the fiscal year 2008 waiver data, and we found this year’s data to be sufficiently reliable for the purposes of our report. To obtain information on the performance of recruits with and without enlistment waivers, we (1) reviewed the Army’s 2007 and 2008 studies of the performance of the conduct waiver population and obtained additional information about these studies’ findings and methodology through interviews with relevant Army officials and (2) reviewed RAND’s 2008 study of the performance of recruits with waivers and obtained additional information on RAND’s ongoing and planned efforts in the area of conduct waivers from relevant RAND and Army officials. We also reviewed DOD and Army policies pertaining to enlistment waivers— specifically the Office of the Undersecretary of Defense for Personnel and Readiness’ June 2008 Directive-Type Memorandum 08-018 on enlistment waivers and Army Regulation 601-210, “Personnel Procurement: Active and Reserve Components Enlistment Program” (June 7, 2007).

To assess the extent to which the Army is directing the growth in its officer force to areas of need and the extent to which it has determined whether short-term tradeoffs to alleviate shortages will have long-term effects on its officer corps, we analyzed various data related to officer demand, strength levels, promotions, and retention. We reviewed the Defense Officer Personnel Management Act of 1980, Senate Report No. 96-375, House Report No. 96-1462, and corresponding provisions of Title 10 of the U.S. Code in order to ascertain legislated benchmarks for officer strength, promotion rates, and options available to the Army to address shortages. We obtained data on officer authorizations and strength levels, as well as information on programs to address officer shortages from the Army’s Office of the Deputy Chief of Staff for Personnel. We compared authorizations and strength levels to identify shortages in specific ranks and specific branches. We analyzed existing and projected trends in officer demand and supply for fiscal years 2003-13. We reviewed documentation and reports on incentive programs for captains and cadets prior to their commissioning. Additionally, we talked to Army officials about their intent behind these programs. Furthermore, we received information on actual promotion rates from the Army’s Office of the Deputy Chief of Staff for Personnel, which we compared to the promotion benchmarks in Senate Report No. 96-375.

The data we reviewed for each of our research objectives generally covered fiscal years 2005 through 2008; however, our analysis of enlistment waivers was limited to fiscal year 2008 due to limitations in waiver data from previous years, such as the system’s failure to capture some waivers and the overcounting of other waivers. Except in the case of the enlistment waiver data, we found the data for fiscal years 2005 through 2008 to be sufficiently reliable for the purposes of this report. We interviewed officials and, where appropriate, obtained documentation at the following locations: Office of the Secretary of Defense Office of the Undersecretary of Defense for Personnel and Readiness Defense Manpower Data Center Army National Guard Assistant Secretary of the Army for Financial Management and Office of Economic and Manpower Analysis, United States Military Office of the Assistant Secretary of the Army for Manpower and Reserve Office of the Deputy Chief of Staff for Personnel Office of the Chief of Staff for Programs U.S. Army Accessions Command U.S. Army Cadet Command U.S. Army Human Resources Command U.S. Army Recruiting Command U.S. Army Reserve Command Congressional Budget Office Congressional Research Service We conducted this performance audit from February 2008 through March 2009 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.

Appendix II: Enlistment Bonuses for Active Duty Soldiers

Table 10 shows the amounts of enlistment bonuses offered to active-duty Army soldiers at the time of the Army’s June 2008 Enlisted Incentives Review Board’s meeting.

Table 11 shows occupational specialties that were determined to qualify for bonuses at the June 2008 meeting of the Enlisted Incentives Review Board.

Appendix III: GAO Review of Felony Waivers

Through the end of fiscal year 2008, the Army granted conduct waivers to some enlistees who had histories of felony charges, and it has a multi-step review process in place to make these determinations. In fiscal year 2008, a fairly small number of individuals were admitted into the Army with a felony waiver. Specifically, 1,048 recruits with felony waivers entered the active Army in fiscal year 2008 (or less than 2 percent of overall accessions). The number of recruits entering the Army Reserve and the Army National Guard with felony waivers in fiscal year 2008 stood at 196 and 128, respectively, or less than 1 percent of these components’ overall accessions for that year. While the Army grants felony waivers in some cases, officials said that the Army does not admit serious criminals who may pose harm to others and to the Army’s larger mission. According to Army documents, the Army does not consider applicants convicted of the most serious felonies, such as murder, sexually violent crimes, domestic violence, and drug dealing, as well as alcoholism and drug dependency. The Army also excludes individuals on probation or parole, in confinement, awaiting criminal charges, and ordered to enter the military in lieu of (or as a result of) being prosecuted.

Army officials said that the Army’s waiver approval process is designed so that only the most deserving candidates are awarded waivers. In assessing an individual for a conduct waiver, the Army uses the “whole person concept,” considering factors such as employment stability, success in school, accomplishments in the community, references from others in the community who have come to know the applicant, and signs of remorse and changed behavior since the incident occurred. The process involves a series of steps and multiple layers of review. Each individual’s waiver request is typically reviewed at 6 different levels for misdemeanors and traffic offenses and at 10 different levels for felonies. All felony waivers and certain serious misdemeanor waivers must be approved at the level of the Deputy Commanding General of the U.S. Army Recruiting Command for active Army and Army Reserve recruits and at the level of the Director of the Army National Guard for Army National Guard recruits.

The Army reported that the top five offenses that receive felony waivers are burglary, narcotics and drug charges, aggravated assault, larceny, and unlawful breaking or entering. Our review of the waiver files for all those accessed by the active Army or Army Reserve in fiscal year 2007 with waivers for felony convictions identified examples within each of these categories. Table 12 provides examples of the various offenses that we found in reviewing the waiver files.

According to the Army, waivers will always be considered in the enlistment process because a one-time incident may not accurately reflect the true character of a person whom the Army ultimately decides to admit. Officials told us that those applying for conduct waivers are strong candidates whose qualifications are high enough to motivate the Army to undertake this rigorous process on their behalf. However, some of the waiver files that we reviewed showed that the waiver applicants did not have high school diplomas or had fairly low AFQT scores.

Appendix IV: Critical Shortages of Officers by Rank and Branch

The table below shows fiscal year 2008 fill rates, or rates at which specific officer career areas, or branches, are currently filled, as well as the numbers of unfilled positions in those career areas. The Army considers a career area to be experiencing a shortage if it has a fill rate below 85 percent.

Appendix V: Comments from the Department of Defense

Appendix VI: GAO Contact and Staff Acknowledgments

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov.

Acknowledgments

In addition to the contact above, David Moser, Assistant Director, Natalya Barden, Catherine Brown, Renee Brown, Tim Carr, Brandon Hunt, Joanne Landesman, Julia Matta, Lonnie McAllister, Charles Perdue, Terry Richardson, Bev Schladt, and Rajneesh Verma made key contributions to this report.