The United States is in the process of implementing the largest drawdown of its military forces since the end of the Vietnam conflict. Both the Congress and the Department of Defense (DOD) have established various targets and objectives to guide that drawdown in a balanced manner, in keeping with the nature of the military personnel system. The military personnel system is highly structured, with specific legal and regulatory requirements governing career advancement and service continuation. Within the parameters of those regulatory requirements, there exists a number of decision points where force shaping, design, and reduction actions can be taken by the services. Given the magnitude of downsizing underway, the Congress has provided expanded force shaping authorities and tools to DOD to facilitate downsizing, minimize involuntary separations, and preserve a balanced remaining force. The National Defense Authorization Act for Fiscal Year 1991 (P.L. 101-510) authorized end-strength levels totaling 1.613 million active duty military personnel as of September 30, 1995. This end strength represents an overall reduction of 561,217 positions, or nearly 26 percent, from the post-Vietnam peak strength of 2.174 million positions at the end of fiscal year 1987. Likewise, the administration, in annual budget submissions during recent years, has submitted out-year reduction targets. The January 1993 budget submission by the previous administration projected continuing force reductions through fiscal year 1999 at which time the services end-strength would be 1.568 million positions. The current administration has accelerated some previously planned personnel reductions but for now has projected future reductions only through fiscal year 1994; its goal for the end of fiscal year 1994 is 1.621 million positions, within 8,000 positions of the levels that the Congress had specified for the end of the following year, fiscal year 1995. Even so, DOD officials have indicated that further reductions will be made as the result of a recently completed “Bottom-up Review” of DOD needs and programs for fiscal years 1995-99; however, new reduction targets by fiscal year were not available as of early September 1993. “the conferees expect the Secretary of Defense to exercise prudent judgment in approving accession levels and force profiles by grade and years of service to guide the personnel strength reduction process in the military services as forces draw down over the next five years.” The conferees also stated their expectation that the military services would maintain the same relationship between officer and enlisted strengths as existed at the end of fiscal year 1990 in making active duty end-strength reductions in the future. DOD has also articulated policy objectives to reduce the military forces, maintain a high state of readiness, treat people fairly—both those who stay and those who leave—and ensure that careful consideration is given to how today’s decisions will affect tomorrow’s force. Some objectives reaffirmed congressional guidance, while others were added such as • protecting careerists near retirement, that is, protecting all qualified service members with 15 years of service or more until they are eligible for retirement; • establishing officer and enlisted accessions at levels necessary to sustain • using the drawdown as an opportunity, wherever possible, to balance officer and enlisted skills; and • establishing policies and procedures that are consistent with legislative guidelines for officer promotion opportunity and timing and, at the same time, controlling senior enlisted grade (top 5 grades) growth and maintaining promotion rates. The services are unique in terms of how they recruit and retain personnel, as well as in how they manage military careers. Within each service, the military personnel system is a centrally managed, “closed” system, meaning that persons recruited with no prior military service are generally brought in at entry level positions and progress through the ranks, contrasted with an “open” system such as the private sector, where new hires can be brought into an organization at various levels depending on the persons’ qualifications and experiences. The military essentially “grows its personnel from within.” Further, the military personnel system, which is predicated on maintaining a relatively young and vigorous work force, operates under an “up-or-out” policy in which members who fail to receive promotions within specific time frames are limited to how long they can remain in the service. Many persons join the military for the education and training benefits, particularly in the enlisted ranks, expecting to remain in the service for only a few years. Others decide to make the military a career; for those individuals, service continuation involves a periodic renewal or extension of their contracted service time. Accordingly, the military services lose significant numbers of personnel through a variety of loss programs each year, and therefore, must recruit enough new members to replace losses and ensure that the services will have enough well trained personnel to meet and sustain future years’ seniority, grade, and experience requirements. DOD data indicate that it has not been unusual for the services to replace more than 15 percent of their active duty personnel each year, even when the authorized end-strength levels are at a relatively “steady state,” neither increasing or decreasing significantly. The services essentially have two personnel systems for active duty military personnel, one for officers and one for enlisted personnel. The officer community is basically governed by the Defense Officer Personnel Management Act (DOPMA), while enlisted personnel management is governed by specific DOD regulations. DOPMA was enacted in 1980, establishing key parameters to managing the officer force with the intent of maintaining a continuous flow of officers through the military personnel system over a 20- to 30-year career path, based on normal attrition from voluntary resignations and retirements. The DOPMA legislation outlines standards and procedures relating to the appointment, promotion, separation and retirement of officers in the armed forces. For example, it stipulates how long officers of various ranks may remain on active duty beyond normal retirement eligibility at 20 years. It also prescribes the number of officers each service is authorized in each of the senior ranks from the 0-4 to the 0-6 pay grades, a number that will vary depending on officer end strengths authorized by the Congress. Central to DOPMA is the up-or-out promotion system in which officers generally advance in groups or cohorts originally determined by the year of their commissioning and compete for promotion against other members of the group at set years or zones of consideration for each paygrade. For example, an officer commissioned in 1983 would normally be considered for promotion to paygrade 0-4 in 1993, at the year 10 mark along with other officers in that year group or cohort. Under the DOPMA system, a select group of the 0-3 officers from a particular cohort can be considered for promotion “below the zone,” that is at year 9 (or earlier in selected instances) along with members from that year’s cohort of officers. However, most of the 1983 commissioned officers would have their greatest potential for promotion “in the zone” at year 10. Failing to be selected for promotion at year 10, the officers in this cohort could have an additional opportunity to be considered for promotion in the following year (or later in selected instances) “above the zone,” along with that year’s cohort. Failure to be selected for promotion then would mean these officers could be involuntarily separated. Thus, it is essential that the force at large be managed in such a manner that personnel are able to compete for, attain, and complete key assignments at the right points in their career progression. DOD Directive 1304.20, dated December 19, 1984, and DOD Instruction 1300.14, dated January 29, 1985, provide guidance and outline the basic parameters to enlisted force management. The directive sets constraints on the pay grade mix and career content (personnel with more than 4 to 6 years of service) of the enlisted force and establishes broad goals for elements such as recruitment, career progression and timing of promotions, service continuation, and military occupation specialty balance. The instruction requests the services to undertake specific enlisted force planning to incorporate long-range personnel goals. These plans provide the Office of the Secretary of Defense (OSD) with the means to monitor the services’ progress toward meeting the objectives of the enlisted personnel management system. Promotions for enlisted personnel at various pay grades are affected by time in grade or service requirements that vary by service, and may involve the use of selection boards. Promotions may also be affected by such things as tests, schools attended, evaluations (ratings), and awards. Theoretically, the services could simply increase or decrease recruiting, modifying it to take into consideration normal attrition and retirement levels, in order to increase or decrease authorized end-strength levels. However, given the structure and the nature of military career management programs, such actions, according to DOD officials, could create imbalances in the force in terms of age, skill levels, and right numbers of personnel by specialty area. Thus, constant management of the force at various career points is required to avoid these problems and stay within force management regulations. As previously discussed, the services must replace many personnel each year, even where no changes in authorized end strength are planned. Many personnel losses are voluntary and attributable to completion of initial periods of obligation, and decisions by service members over whether to continue and make the military a career choice. At the other end of the personnel pipeline, many voluntary losses each year are due to retirement decisions. Involuntary reductions can occur anywhere along this personnel pipeline due to misconduct. (App. II shows the services’ loss rates by specific categories for fiscal year 1992.) Unique to the military personnel system is a variety of military personnel requirements and actions, in addition to regular accessions and losses, that may be used to help shape the force, ensure balanced manning by rank and specialties, and preserve needed career advancement opportunities. These actions include: • using early release programs to permit individuals to separate in advance of their scheduled end of enlistment period; tightening quality controls, such as physical weight standards, governing those who will be permitted to reenlist; limiting the maximum number of years that members at a given rank may continue in the service before being denied re-enlistment opportunities; • selecting certain nonretirement eligible personnel to be involuntarily separated through use of formal reduction-in-force (RIF) boards; and • selecting certain retirement eligible personnel to retire before the normal mandatory time frame through use of formal Selected Early Retirement Boards (SERB). In completing action on the National Defense Authorization acts for fiscal years 1991, 1992, and 1993, the Congress authorized certain additional measures to induce downsizing, and minimize the adverse affects on individuals as they transition to civilian life. These actions included: • expanding reduction-in-force (RIF) authority to include certain officers previously exempt from RIF action related to the source of their commissions; • expanding authority for use of SERBs for officers; • reducing certain time in grade requirements for voluntary retirements at current grades among officers having already completed the 20 years of total service needed to retire; • extending lump-sum separation pay and transition assistance to enlisted personnel who are involuntarily separated, having completed 6 years or more of service—only officers were previously eligible to receive this benefit;• authorizing two special categories of separation pay to induce voluntary separations, the lump sum Special Separation Benefit (SSB) and the Voluntary Separation Incentive (VSI), to induce voluntary separations among those having completed 6 or more years of service at the time the legislation was enacted; and • providing, effective with fiscal year 1993, DOD with the authority to offer a 15-year retirement option for selected members of the military. Persons separating under SSB and VSI provisions are also entitled to the same transition assistance programs available to persons receiving pay under condition of involuntary separation. The Chairman of the former Subcommittee on Manpower and Personnel of the Senate Committee on Armed Services asked us to examine DOD’s implementation of military downsizing in accordance with legislative guidance and authorizations. We determined (1) what progress DOD has made toward meeting reduction targets, (2) how downsizing actions are affecting new recruiting or accessions, (3) what range of voluntary and involuntary reduction actions are being taken to meet downsizing objectives, (4) how downsizing is being accomplished across various groupings of officer and enlisted personnel by years of service and how this is affecting force profiles, and (5) what issues might be important to future reduction decisions. We reviewed congressional legislation, budget documents, manpower statistical data, and individual service personnel plans. We also interviewed appropriate officials at the following organizations: • Office of the Deputy Assistant Secretary of Defense, Personnel and Readiness, Military and Manpower Personnel Policy Directorate, and Personnel Support Policy and Service Directorate; • Office of the DOD Comptroller; • Department of the Air Force, Deputy Chief of Staff for Personnel, Directorate of Personnel Programs; • Department of the Army, Deputy Chief of Staff for Personnel, Directorate • Department of the Navy, Bureau of Naval Personnel, Officer Plans and Career Management Division, and Enlisted Plans and Career Management Division; and • Department of the Navy, Office of the Deputy Chief of Staff for Manpower and Reserve Affairs (Marine Corps), Manpower Plans and Policies Division. In completing this review, we made use of manpower and personnel data from budget documents and other data sets from the Office of the Secretary of Defense (OSD), the individual services, and the Defense Manpower Data Center (DMDC). In portraying historical data, fiscal year 1980 was chosen because it reflected the beginning point for the defense build-up of the 1980s; fiscal year 1987 was chosen because it reflected the post-Vietnam peak year of active duty end-strength levels just prior to the onset of recent downsizing activities. Our comparison of data showed inconsistences in common data sets among the services, OSD, and DMDC. We found inconsistencies within singular documents, such as budget justification documents submitted to the Congress, where the same information was presented in more than one section of the document. These inconsistencies were more prevalent when the data were related to future personnel actions, but also affected DOD reports summarizing prior year actions to some extent. Time did not permit a detailed examination of the services’ and DOD’s data systems to fully document the validity of the data and the bases for inconsistencies. Where discrepancies where noted, we conferred with DOD officials for their judgments as to the most appropriate data source. We attempted to use the best available information in all cases, recognizing that numbers used in this report may vary slightly from other reported sources. Thus, data presented in this report dealing with accessions and losses should be viewed as approximations, not final and absolute numbers. We have added special notes to tables used in this report to further highlight data limitations as warranted. We conducted our review from April 1992 to July 1993 in accordance with generally accepted government auditing standards. By the end of fiscal year 1993, DOD expects to have reduced its active duty force levels more than 446,000 positions below end-strength levels that existed at the end of fiscal year 1987, when the military was at its post-Vietnam peak of 2.174 million positions. At the same time, and possibly contrary to public perception, DOD is, and expects to continue, recruiting a large number of personnel each year in order to maintain and sustain a balanced force to meet future operational requirements. As a consequence, a much greater degree of personnel turnover is occurring than is generally recognized. Given the extent of personnel turbulence involved in downsizing and shaping the force, and uncertainties over future force levels, service officials indicate that flexibility and periodic reassessment are required in managing accession levels. At the end of fiscal year 1993, DOD end-strength levels are expected to be down to 1.728 million positions, a 21-percent reduction over fiscal year 1987’s end-strength levels; by the end of fiscal year 1994, DOD expects end-strength levels to be at 1.621 million, a reduction of 25 percent. Table 2.1 shows the reductions accomplished and expected by the services through fiscal year 1994. The largest of the reductions are occurring in the Army and the Air Force, which, by the end of fiscal year 1994, are slated to reduce their levels by 31 and 30 percent, respectively, over fiscal year 1987 end-strength levels; lesser reductions are occurring in the Navy and the Marine Corps, which are to reduce their end strengths by 18 and 13 percent, respectively, by the end of fiscal year 1994. Selected Reserve force levels will be reduced from 1.15 million in fiscal year 1987 to 1.02 million at the end of fiscal year 1994—an 11-percent reduction. (App. I more completely summarizes current planned changes in DOD force levels by service and active and reserve components from fiscal years 1980 through 1994.) However, as previously discussed, reductions are planned beyond fiscal year 1994, although complete out-year reduction targets have not yet been finalized by the administration. DOD’s recruiting plans for fiscal years 1993 and 1994 call for recruiting about 225,000 and 206,000 persons, respectively. Table 2.2 contrasts the levels of accessions in fiscal years 1987 and 1988 with actual accessions in fiscal year 1992 and those projected for fiscal years 1993 and 1994. DOD officials have reported greater difficulties in recruiting during this period of downsizing; some service officials have attributed these difficulties to a perception of some young people that the military is not recruiting during downsizing or a view that the military no longer affords as viable a career option as it once did. DOD officials also cite some early signs of reduced quality in recent recruits. In spring 1993, DOD officials reported that the number of new personnel with high school diplomas dropped DOD-wide during the first half of fiscal year 1993 to 94 percent, from a high of 99 percent in 1992; for the Army, the reduction was greater, down to 89 percent. However, an Army official expressed optimism that the rate could rise closer to the Army’s target of 95 percent during the remainder of the year, the prime time for recruiting new high school graduates. DOD officials subsequently reported in September 1993, that the number of new military personnel DOD-wide with diplomas during the first 9 months of fiscal year 1993 was 95 percent. While this level is still lower than the 99-percent level achieved in fiscal year 1992, it compares favorably with the 89-percent average achieved for the period 1980 through 1992. The Army’s current accession levels shown for fiscal year 1993 reflect a 7,000-reduction from planned levels at the beginning of the fiscal year. However, Army officials told us that the decreased accession levels were related primarily to faster paced reductions than originally planned, which resulted in fewer accessions being needed, and were not related to any decrease in quality of recruits. Projected accession levels for fiscal years 1993 and 1994 might be considered to be relatively high for a time of such significant downsizing; however, total accessions planned for fiscal year 1993 are down 34 percent in relation to fiscal year 1987’s level. Unless actual loss rates for the services each year are closely examined, it can be concluded that the number of persons leaving the services during these years of force downsizing is reflected simply in the changes in service end strength. Our March 25, 1992, testimony before a Subcommittee of the Senate Armed Services Committee noted that shaping the force requires a larger number of accessions and attritions than would be the case if the focus were primarily on limiting the recruitment of personnel to achieve end-strength reduction goals. Total numbers of persons leaving the services during fiscal years 1992 and 1993 were projected to be about 3 times the amount of net reductions in end strength. For fiscal year 1994, DOD expects to recruit about 206,000 new personnel and the departure of 313,000, for a net end-strength reduction of about 107,000 positions. Using beginning fiscal year 1994 end-strength levels as a base, DOD expects, during that fiscal year, to separate 19 percent of its people, recruit 13 percent new personnel, and achieve a 6-percent net end-strength reduction by the end of that year. The numbers of personnel entering and leaving the services during this period of downsizing, compounded by uncertainties and heightened anxiety levels over future careers of others who remain, add to what many military officials have characterized as a high degree of turbulence affecting their forces. While downsizing actions have of necessity resulted in significant personnel turnover levels and turbulence, they aggravate to some extent, already significant turnover levels associated with the services’ systems of rotating personnel from one assignment, unit, and location to another, including between the United States and overseas assignments. Our previous reports on Army and Marine Corps training have noted that senior leaders have described this personnel turbulence as one of the most significant problems affecting the Army’s ability to maintain a trained force. The Congress and DOD have provided guidance to the services in establishing accession levels. Some DOD guidance suggests a greater degree of precision is available in establishing fixed accession levels than the services have found practical during downsizing. However, with congressional authorizations for use of financial separation incentives to induce voluntary attritions, DOD encouraged the services to retain relatively high levels of accessions. It did so in order to build and sustain a more balanced force for the future, minimize the potential for skill imbalances and promotion stagnation, and protect career options for remaining personnel. DOD’s action also reflects budgetary decisions to increase the ratio of entry level to more senior personnel in the career force to reduce the cost of the force. The conferees to the fiscal year 1991 defense authorization act expressed an expectation that the Secretary of Defense would exercise prudent judgment in approving accession levels. OSD established the objective of programming accessions to a level not greater than that required to sustain out-year force levels. It also stated that accessions should not be programmed to less than 85 percent of the level required to sustain the out-year force levels. In establishing accession rates to sustain a future force, the services must examine historical trends in attrition and replacement rates, factor in the probabilities of how long individuals are likely to remain on active duty, and apply a mathematical formula to calculate replacement or accession rates per year. Service officials point out that such forecasting can be very imprecise without stable long-term force levels and retention patterns, two factors that have not been present during the current downsizing. Accordingly, service officials indicate that accession levels need to be reassessed frequently, based on changing conditions, and adjusted to replace losses and meet end-strength requirements. One such adjustment has already been alluded to regarding the change in fiscal years 1993 and 1994 accession levels due to the more rapid drawdown than previously planned. The services have used a number of authorities or “tools” to reduce and shape its force by various year groupings of officer and enlisted personnel. These tools have ranged from use of voluntary early release programs and financial separation incentives to induce separations to involuntary RIFs. The services vary in the extent to which they have experienced losses under each of these categories. (See app. II for a summary of losses occurring during fiscal year 1992 by service.) To achieve reductions in a balanced manner across pay grades and skill areas, the reductions have of necessity fallen along a spectrum ranging from voluntary, to induced, to involuntary reductions—the most adverse being RIFs. DOD has initiated a number of actions to facilitate voluntary separations for persons wanting to do so. The more significant actions have involved use of financial separation incentives and early release programs; additionally, beginning with this fiscal year, DOD has authority to offer early retirement for personnel with at least 15 years of service. The most publicly visible tools the services have used to achieve downsizing objectives have centered on the use of financial separation incentives—SSB, a lump-sum separation incentive, as well as VSI, a variable annuity payment. Both have been used to induce separations for persons whose eligibility is based on having completed between 6 and 20 years of service at the time the legislation became effective in December 1991. However, DOD data on fiscal year 1992 separations show that the median length of service for those persons separating under SSB and VSI programs was 11 years. Table 3.1 summarizes the number of persons by service separating under SSB and VSI during fiscal years 1992 and 1993, and summarizes projected SSB and VSI separations in fiscal year 1994. Our March 1992 testimony on military force downsizing pointed out the much greater long-term value of VSI to the recipient but also indicated that initial trends showed an overwhelming majority of persons were opting for the smaller value, but single lump-sum payment, of SSB; our analysis shows that this trend continues. Of those opting for the financial incentive separations in fiscal year 1992, 87 percent chose SSB. DOD officials expect this trend to continue. (App. III contrasts the differing values of the separation incentive pay options with involuntary separation pay and indicates the costs to DOD for fiscal year 1992.) Of all the services, the Army has made the greatest use of the separation incentives, reflecting the fact that it has the largest reductions of any service, both in terms of numbers and percentages. However, each of the services has used the incentives in varying degrees to achieve downsizing objectives as well as to shape its officer and enlisted forces. Army officials explained that the Army has offered the incentives to all eligible officers, except for those in the medical skills area. In some instances, the Army has offered the incentives to officers in certain year groups; this was predicated on the knowledge that if sufficient numbers of persons did not elect to accept the incentives, a RIF would be required. During fiscal year 1993, the Army targeted officers in pay grade 0-3 who were in year groups 1983 and 1984; in fiscal year 1994, it expects to target 0-3s in year group 1985. The Army will also offer the incentives to officers who fail their first board consideration for promotion to 0-4 during the respective fiscal years. The Navy did not begin using the incentives for its officers until fiscal year 1993, when it offered them to various officer communities within pay grades 0-3 and 0-4. In fiscal year 1994, the Navy plans to offer the incentives to various officer communities in pay grades 0-3 through 0-5. The Marine Corps originally targeted officers in overstrength specialties in pay grade 0-4 to improve promotion flows. In fiscal years 1993 and 1994, it has offered and expects to continue offering incentives to persons in the 0-3 pay grade as well. The Air Force has made offers to most of its 0-3s and 0-4s, except pilots. In fiscal year 1994, the Air Force is planning to target its 0-4s, including pilots. In terms of enlisted personnel, all of the services are using the incentives to help reduce personnel in overstrength skill areas and in other areas in some cases. The Army has offered the incentives to enlisted members in over-strength skills and to members who are subject to separation under changing policies limiting how long personnel can remain on active duty without being promoted. The Navy originally used the incentives to target mid-grade (pay grades E-5 and E-6) members in overstrength specialties, and in fiscal year 1994, it is expanding the eligibility to target overstrength specialties in pay grades E-4 through E-9. The Marine Corps has used the incentives to target enlisted members who were in skill areas no longer needed and to reduce overstrength areas. The Air Force initially offered the incentives primarily to mid-grade (pay grades E-4 and E-5) personnel who had more than 9 years of service and were in less critical skill areas, but for fiscal year 1994, it plans to target personnel in pay grade E-5. It also plans to open up the eligibility criteria incrementally, as necessary. The services’ use of these incentives accounted for 13 percent of overall service separations in fiscal year 1992, and their use is expected to account for 9 percent and 6 percent, respectively, in fiscal years 1993 and 1994. According to OSD, the decreasing numbers in fiscal years 1993 and 1994 reflect the fact that most persons interested in the incentives have taken them and that the base of eligible personnel is lessening. The base of eligible persons grows smaller each year since a service member must have had between 6 and 20 years of service as of December 5, 1991, when the legislation became law. Thus, the total population of potentially eligible personnel is decreasing yearly. Additionally, this legislation only authorizes the use of these incentives through fiscal year 1995. As of now, the Navy is projecting that its 0-3 officer population in the 1987 year group is in excess of requirements. Regardless of additional reductions in authorized end-strength levels resulting from the recent Bottom-up Review, the 1987 year group contains approximately 2,000 officers more than DOPMA 0-4 limitations will allow to be promoted without causing an imbalance. This means that around fiscal year 1996 the Navy will be faced with either implementing RIF actions or seeking temporary legislative waivers to DOPMA grade tables to permit the promotion of a greater number of personnel than would otherwise occur. An extension of authority for the incentives and the window of eligibility would offer another option for dealing with this situation; an option already used by the Army in fiscal years 1992 and 1993. Under early release programs, the services permit individuals to separate in advance of their scheduled end of enlistment period; the early releases generally occur in the same year that personnel are scheduled to separate, but there have been instances where they have occurred earlier. They are used most often to separate persons during their first term of enlistment, generally those who fall within 2 to 6 years of service. These programs have been used in recent years by all of the services, except for the Marine Corps (see table 3.2). Service officials report that they have had to make less use of the programs in fiscal years 1992 and 1993 than in earlier years, before the availability of financial separation incentives. However, service officials indicate that this is still an important tool to use as needed to help reduce and shape that portion of the force having less than 6 years of service; it can be a particularly attractive tool from a cost saving standpoint, since it can help reduce salary costs in the year in which it is used and does not involve any severance pay. In the National Defense Authorization Act for Fiscal Year 1993, the Congress authorized DOD to temporarily approve the retirement of military personnel with at least 15, but less than 20, years of service to further facilitate downsizing and avoid involuntary separations. DOD’s implementing guidance gives each of the services authority to prescribe criteria for eligibility for early retirement, including such factors as grade, years of service, and skill area. The guidance stipulates that the authority should be used to retire members who are excess to the services’ short- and long-term needs and that, if possible, the services should manage their programs so those members nearest 20 years of service are offered early retirement first. Authorizing legislation stipulates that retirement pay for those personnel leaving under this program will reflect a reduction of 1 percent for each year short of 20 years. Table 3.3 summarizes the planned use of this authority by each of the services. Each of the services indicates that it is still in the process of determining how extensively it will use this authority. However, this authority is generally being used to target overstrength skill areas and year groups starting with those close to 20 years of service. The Air Force and the Army have each tentatively targeted the majority use of the early retirement authority toward their enlisted ranks while the Navy is targeting primarily its officer force. The Marine Corps plans to use this authority only during fiscal year 1993 to separate 100 officers. While the various force management tools have been helpful in minimizing the need for involuntary separations, the services have still had to separate some personnel having less than 20 years of service under less than voluntary means, such as through formal RIF actions, to meet downsizing and force shaping objectives. Additional reductions have occurred through the use of SERBs to reduce the ranks of retirement eligible personnel. Other controls over service continuation have also been used to further reduce the force. In fiscal year 1992, the Army was the only service to separate personnel, those at the 0-4 level, through formal RIF actions; this included 244 officers. Early in fiscal year 1993, the Air Force separated 1,595 officers by RIF actions, principally affecting 0-3 level officers. The Army also anticipated using RIF actions in fiscal year 1993 but obtained enough voluntary attritions from repeated VSI and SSB offers among 0-3 officers in year groups 1983 and 1984. None of the services has used RIF procedures to date to separate enlisted personnel. However, the services can deny reenlistment to enlisted personnel without the need for RIF action. Each of the services has used available SERB authority to reduce the population of officers and enlisted personnel already eligible to retire. Although a SERB is not technically considered an involuntary separation, it is considered to be essentially that by the persons who are selected to retire under this formal board selection procedure. In fiscal year 1992, a total of 3,429 officer and enlisted personnel were formally selected for retirement under SERB procedures (see table 3.4), and the services project similar numbers in fiscal years 1993 and 1994 (see tables 3.5 and 3.6). The services have used other force shaping tools to facilitate downsizing, including tightening quality control standards for those persons who are allowed to continue in military service and limiting the maximum number of years that a member may serve at a given pay grade before being denied reenlistment rights. Each of the services has also tightened quality standards affecting the ability of military personnel to continue their careers at the conclusion of their initial periods of obligated service. Actions taken have included shifting from decentralized to centralized approval authority over reenlistments. In addition, greater attention is being given to physical fitness and weight standards and substance abuse. Service officials told us that tightened standards are more apt to affect enlisted personnel in their first enlistments than career personnel. They indicated that the number of persons in their first enlistment permitted to reenlist is also affected by a reduced need for certain skills. Numbers of persons affected by these controls are included within the tabulations of all persons leaving the services each year at the end of their term of service or contract and are not broken out separately (see app. II). Each of the services has reduced time frames or tenure standards governing how long career enlisted members may stay at a given pay grade before being denied reenlistment rights. • The Navy reduced the time that persons in enlisted grades E-6, E-7, and E-8 could serve without further promotion from 23 to 20, 26 to 24, and 28 to 26 years, respectively. • The Marine Corps changed its tenure rule for only one pay grade, E-7, reducing service time from 25 to 22 years. • The Air Force made changes in tenure rules for pay grades E-4 and E-6 through E-8; the most significant change being to reduce the authorized tenure for an E-4 from 20 to 10 years. • The Army has changed tenure rules for those in pay grades E-4 through E-8. Service officials indicate that these tightened standards have been responsible for facilitating the early departure of a number personnel; however, precise numbers are not available. Some of these persons retired, whereas others not eligible for retirement separated under financial separation incentive programs. DOD’s use of its various force shaping tools has helped to control, though not entirely contain, personnel growth in force profiles such as years of service and pay grades. These changing force profiles are part of a longer term trend dating to before the onset of downsizing efforts in the late 1980s. Table 4.1 aggregates these changing profiles at the DOD level for fiscal years 1980, 1987, and 1992. There are positive and negative aspects of such changes in force profiles affecting each of the services. In recent years, the military services have been widely recognized and cited by senior military leaders as being more capable and better trained than ever. One of the factors contributing to this, according to various military officials, has been the growth in experience levels of military personnel, gauged by length of service. This situation exists across various groupings of personnel by years of service ranging from those in their initial tours of duty to those eligible for retirement. Since fiscal year 1980, each of the services, to varying degrees, has experienced a continual growth in experience levels, particularly for enlisted personnel. This trend is most pronounced in terms of the decline in percentages of pre-career personnel. Table 4.2 shows the decline in enlisted personnel having less than 4 years of service for each of the services at the end of fiscal years 1980, 1987, and 1992. Similar though less dramatic changes have also occurred within the officer ranks of each of the services. Growth in service experience levels is seen in proportional increases in numbers of service members having more than 15, but less than 20, years of service. Table 4.3 shows the percentage of enlisted personnel having between 15 and 20 years of service for each of the services at the end of fiscal years 1980, 1987, and 1992. Increases have also been noted in the percentage of officer personnel with more than 15 years of service. Table 4.4 shows the percentage of officer personnel having between 15 and 20 years of service for each of the services at the end of fiscal years 1980, 1987, and 1992. As indicated in tables 4.3 and 4.4, the percentage of members near retirement has risen in all four services over the past 12 years. One reason for part of the increase is related to an overall trend toward a more experienced force since the all-volunteer force began in 1973. Until 1988, according to DOD officials, service members with more than 15 years had entered military service prior to the all-volunteer force system, which drafted a significant portion of the required accessions. Another reason is that, in recent years, the Congress and DOD have emphasized protecting members near retirement from involuntary separations. The percentages could stabilize or decline somewhat within the next 2 years as the services make use of new temporary authority to offer early retirement for personnel having completed between 15 and 20 years of service. All of the services, however, indicate that they are still in the process of determining how extensively they will use this new authority. While this move toward a more senior force has occurred in each of the services, the “youth to experience” mix has always differed significantly among the services. As high as the percentages are for services in fiscal year 1992, they are much less than they were at the end of fiscal year 1980. The high number of personnel with relatively few years of experience points to relatively high personnel turnover rates within the services. This is an important addition to the more frequently recognized turbulence involving the rotation of personnel from one unit or assignment to another, including to and from overseas assignments. Tradeoffs exist between a force that is more senior and a force that is more junior and relatively less experienced. Generally, service officials believe that the trend indicated by table 4.1 is one indicator of a better trained force than the one that existed prior to the all-volunteer force or during the mid- to late-1970s, a time often referred to as a period of the “hollow force.” OSD officials also share this view. However, they are also aware that, along with this growth in experience, there comes an increase in average personnel costs, and OSD has, during this drawdown, exerted influence on the services to maintain relatively high accession levels, thereby having the effect of slowing these recent trends. For example, while the relative size of the lower ranking enlisted population dropped steadily during the 1980s, that level of decline has slowed in recent years with the DOD average changing from 43.1 percent at the end of fiscal year 1991 to 42.7 percent at the end of fiscal year 1992. Since fiscal year 1980, the percentage of members with more than 20 years of service has increased moderately, more so for officer than enlisted personnel. Tables 4.5 and 4.6 show the percentages of enlisted personnel and officers having more than 20 years of service, for each of the services, at the end of fiscal years 1980, 1987, and 1992. While the percentage of enlisted personnel with more than 20 years of service increased slightly DOD-wide, the average increase for officers was more noticeable from fiscal year 1980 through fiscal year 1992, with the greatest increase occurring between fiscal years 1985 and 1988. However, to a certain extent, each of the services minimized the potential for greater growth during fiscal year 1992 by the use of SERBs, and each service expects to do so further in coming fiscal years, with the greatest emphasis on officer personnel. Congressional conferees, in providing force reduction guidance, indicated a desire to see the services maintain the same relationship between officer and enlisted ranks as existed at the end of fiscal year 1990. However, as shown in table 4.7, some moderate growth in the ratio of officers to enlisted personnel has occurred. The changes occurring since fiscal year 1990 are reflected in a longer term trend as indicated by the change between fiscal years 1980 and 1992. Some service officials believe that some shift in officer to enlisted ratios is inherent in downsizing. That is, officer to enlisted ratios typically rise during downsizing as reductions are made to the proportionally larger enlisted ranks and fall during a build-up as proportionately more enlisted personnel are added. Army officials also point to congressionally mandated increases in medical personnel manning levels that have required retention of more officer personnel. Changes have also been noted in the average pay grades of officer and enlisted personnel during downsizing, as well as being part of a longer term trend, evidenced by changes since fiscal year 1980. Table 4.8 shows changes in average enlisted pay grades for fiscal years 1980, 1987, and 1992. Table 4.8 and additional data we examined for each of the intervening years show an upward trend in average enlisted pay grades, with a 9.98 percent increase DOD-wide, since fiscal year 1980, with little differentiation in the degree of change occurring annually during the current downsizing period from earlier years. In comparison with enlisted personnel pay grades for these three fiscal years, a less significant change occurred in officer pay grades (see table 4.9). However, as with enlisted personnel, officer pay grades show little difference in the degree of annual change during the current downsizing period from earlier years. DOD’s guidance to the services in planning for downsizing stipulated that they should control growth in the top five enlisted pay grades. Table 4.10 shows the percentages of enlisted personnel in the top five enlisted pay grades (E-5 through E-9) for fiscal years 1980, 1987, and 1992. The table shows that these top five pay grades have increased by several percentage points relative to the overall enlisted force during downsizing; however, this growth is also part of a longer term growth trend. Our examination indicates that the greatest degree of growth is concentrated in pay grades E-6 and E-7. OSD and service officials offered a number of observations about the growth in pay grades. They stated that the changing technology and the complexity of today’s weapon systems have increased the requirement for more senior positions. These officials also stated that a smaller force is a more senior force; however, we do not necessarily agree that this has to be the case since our examination of the top officer pay grades shows a much smaller increase in senior pay grades. These officials further expressed the view that the current growth in senior enlisted ranks is temporary and that they expect some leveling off in the future with the changes in tenure rules, and use of SERBs and early retirements; they also stated that OSD and service controllers are watching the increase because of budgetary concerns. It is not clear to us that this is necessarily a temporary situation given the long-term trend shown in table 4.10. We do agree, however, that this is a situation that should be watched from a budgetary standpoint. Although DOD has already achieved much of its previously planned force reductions, additional reductions are planned. However, as indicated in chapter 2, effective downsizing requires more than the curtailment of recruiting; it requires maintaining significant levels of recruiting and preserving a continuous personnel stream. This situation adds to the importance of using the various force shaping and downsizing tools discussed in chapter 3 to achieve downsizing goals in a manner that retains a balanced force and viable career opportunities for the future. Use of these tools has helped to shape and minimize distortions in the force but, as indicated in chapter 4, there are some continuing changes in selected force profiles that are part of much longer term trends. Collectively, the issues discussed in this report help to focus attention on some issues we believe are key to future force reduction decision-making. These issues include continuing changes in overall force profiles, pace of future reductions, correlating such reductions to changes in force structure, and determining what accession levels should be, factoring in multiple trade-offs. However, the recent drawdown experience does more to offer perspectives on these issues than to suggest simple, fixed answers for the future. Optimum force profiles in terms of experience levels, average pay grades, and officer/enlisted ratios are not clearly established and would likely be difficult to develop with any degree of uniformity among the services. Nevertheless, because of their impact on readiness and costs, we believe that general trends in force profiles should be considered by the administration and the Congress in deciding future force levels. At the same time, we believe that areas such as officer/enlisted ratios and increasing average pay grades could benefit from more in-depth analyses to determine to what extent the growth represents validated requirements and how future downsizing decisions are apt to affect these requirements. We expect to complete more in-depth reviews of personnel requirements in the future. In considering how quickly further reductions should occur, it will be important to consider that DOD’s military personnel system experiences significant turbulence with high levels of personnel turnovers during normal times and that this turbulence can be compounded by required reductions to end strength. The turbulence is not caused simply by the exodus of personnel; it also includes the intake of new personnel to be trained and added to units. Turbulence also is associated with the normal rotation of personnel from one assignment or unit to another. Another consideration is the impact of personnel reductions on unit manning levels. Army officials acknowledge that, during the current drawdown, personnel reductions have occurred more quickly than have changes in unit force structure, creating some undesired undermanning of units. While they expect this problem to correct itself as future unit structure reductions occur, they recognize and have some concern that the problem could be exacerbated with likely increases in personnel reduction targets unless the targets are well correlated with additional structural reductions. In determining accession levels, it will be important to consider the short- and long-term potential impact of any significant reduction in accession levels on the force. In the short term, significant reductions in accession levels can be attained but, in doing so, they can result in a relatively more costly, but more experienced force—as the average pay grades for the remaining force increase. From a long-term perspective, significant curtailment of accessions today can pose greater potential for force imbalances in the future—imbalances associated with a higher graded force and reduced promotion and career opportunities for younger members of the force. One additional factor that could affect accession levels is the quality of new recruits. DOD has recently noted a drop in the quality of new recruits during the first half of fiscal year 1993. This trend, should it continue, could suggest the need to make some further trade-offs between high accession levels and the loss of quality, experienced personnel. DOD has a number of tools available to help shape the force as reductions occur, tools that can be used in combination to produce a balanced force across pay grades, year groups, and skill areas. DOD has accomplished a majority of its previously planned active duty force reductions; however, senior DOD officials have indicated that further reductions are planned as the result of a recently completed review of future DOD needs. DOD and the services have reduced accession levels over previous years, but are still recruiting large numbers of personnel each year as part of their efforts to preserve and sustain a balanced force for the future. DOD has used various force shaping authorities or tools to help drawdown the military forces in a balanced manner, with an emphasis on voluntary reductions. DOD’s ability to meet force reduction targets while seeking to retain a balanced remaining force has been enhanced by the various authorities, including incentives and transition assistance that the Congress has provided. Many of these special authorities expire at the end of fiscal year 1995. Extension of these authorities is warranted if the Congress desires to continue its emphasis on minimizing involuntary reductions, as end-strength reductions continue to occur. DOD’s approach to force reductions, along with its continued emphasis on accessions, has helped to control, although not entirely contain, some proportional personnel growth in years of service and rank. A negative consequence of such growth is increased cost; however, a positive aspect is increased experience levels. These two issues will require trade-offs in force shaping. Given that DOD’s downsizing is apt to continue for several more years, the Congress, to the extent it desires a continuing emphasis on minimizing involuntary separations, may want to consider extending the use of special financial separation incentive programs beyond the current deadline of fiscal year 1995. Also, the original authority for use of the separation incentives was limited to those who had attained 6 years of service at the time the legislation was enacted in December 1991. Therefore, the Congress may also want to amend the legislation to include all who have attained 6 years of service within the time frame for which the incentives are authorized as a means of broadening the pool of persons eligible for the incentives and minimize the potential for greater involuntary separations in the future. DOD fully concurred with the report’s findings and matters for congressional consideration. (See app. IV.)

Summary: Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) compliance with congressional guidance and authorizations in military downsizing, focusing on: (1) DOD progress towards meeting reduction targets; (2) the effects of downsizing on new recruiting or accessions; (3) voluntary and involuntary reduction actions to meet downsizing objectives; (4) the accomplishment of downsizing across various groups of officers and enlisted personnel by years of service and its effect on force profiles; and (5) issues important to future reduction decisions. GAO found that: (1) DOD has accomplished the majority of its planned active duty force reductions, and its fiscal year (FY) 1993 personnel level will be about 21 percent below its FY 1987 personnel level; (2) as a result of the DOD bottom-up review, further reductions below planned FY 1995 levels are probable; (3) DOD and the services have reduced planned personnel accession levels by 34 percent, but they are continuing to recruit large numbers of personnel in order to sustain a balanced force across various pay grades and skill areas and preserve future career opportunities and military capabilities; (4) personnel turnover rates are higher than force reduction rates due to uncertainties, career anxiety, and force-shaping decisions; (5) DOD has given priority to voluntary separations through early release, retirement, and financial incentives, but the pool of likely candidates for voluntary separation is declining; (6) involuntary reduction actions involve higher retention standards, mandatory retirement of selected personnel, and reduction-in-force for nonretirement-eligible personnel; (7) the ratio of officers to enlisted personnel and average pay grades have increased slightly during downsizing; and (8) issues that could impact future force reduction decisions include future force profiles, how quickly the force can be reduced, what accession levels should be, and what cost trade-offs are most desirable between a younger or a more experienced force.