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Testimony: 

Before the Subcommittee on Military Personnel, Committee on Armed 
Services, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:00 p.m. EST: 

Tuesday, January 30, 2007: 

Military Personnel: 

DOD Needs to Provide a Better Link between Its Defense Strategy and 
Military Personnel Requirements: 

Statement of Janet A. St. Laurent, Director: 
Defense Capabilities and Management: 

GAO-07-397T: 

GAO Highlights: 

Highlights of GAO-07-397T, a testimony before the Subcommittee on 
Military Personnel, Committee on Armed Services, House of 
Representatives 

Why GAO Did This Study: 

The war in Iraq along with other overseas operations have led to 
significant stress on U.S. ground forces and raised questions about 
whether those forces are appropriately sized and structured. In 2005, 
the Department of Defense (DOD) agreed with GAOís recommendation that 
it review military personnel requirements. The Office of the Secretary 
of Defense (OSD) concluded in its 2006 Quadrennial Defense Review (QDR) 
that the number of active personnel in the Army and Marine Corps should 
not change. However, the Secretary of Defense recently announced plans 
to increase these servicesí active end strength by 92,000 troops. Given 
the long-term costs associated with this increase, it is important that 
Congress understand how DOD determines military personnel requirements 
and the extent of its analysis. 

GAO has issued a number of reports on DODís force structure and the 
impact of ongoing operations on military personnel, equipment, 
training, and related funding. This statement, which draws on that 
prior work, focuses on (1) the processes and analyses OSD and the 
services use to assess force structure and military personnel levels; 
(2) the extent to which the servicesí requirements analyses reflect new 
demands as a result of the changed security environment; and (3) the 
extent of information DOD has provided to Congress to support requests 
for military personnel. 

What GAO Found: 

Both OSD and the military services play key roles in determining force 
structure and military personnel requirements and rely on a number of 
complex and interrelated analyses. Decisions reached by OSD during the 
QDR and the budget process about planning scenarios, required combat 
forces, and military personnel levels set the parameters within which 
the services can determine their own requirements for units and 
allocate military positions. Using OSD guidance and scenarios, the 
Armyís most recent biennial analysis, completed in 2006, indicated that 
the Armyís total requirements and available end strength were about 
equal. The Marine Corpsí most recent assessment led to an adjustment in 
the composition and mix of its units. 

Both the Army and Marine Corps are coping with additional demands that 
may not have been fully reflected in OSD guidance, the QDR, or in 
recent service analyses. First, the Armyís analysis did not fully 
consider the impact of converting from a division-based force to 
modular units, partly because modular units are a new concept and 
partly because the Army made some optimistic assumptions about its 
ability to achieve efficiencies and staff modular units within the QDR-
directed active military personnel level of 482,400. Second, the Armyís 
analysis assumed that the Army would be able to provide 18 to 19 
brigades at any one time to support worldwide operations. However, the 
Armyís global operational demand for forces is currently 23 brigades 
and Army officials believe this demand will continue for the 
foreseeable future. The Marine Corpsí analyses reflected some new 
missions resulting from the new security environment. However, the 
Commandant initiated a new study following the 2006 QDR partly to 
assess the impact of requirements for a Special Operation Command. 

Prior GAO work has shown that DOD has not provided a clear and 
transparent basis for military personnel requests that demonstrates how 
they are linked to the defense strategy. GAO believes it will become 
increasingly important to demonstrate a clear linkage as Congress 
confronts looming fiscal challenges facing the nation and DOD attempts 
to balance competing priorities for resources. In evaluating DODís 
proposal to permanently increase active Army and Marine Corps personnel 
levels by 92,000 over the next 5 years, Congress should carefully weigh 
the long-term costs and benefits. To help illuminate the basis for its 
request, DOD will need to provide answers to the following questions: 
What analysis has been done to demonstrate how the proposed increases 
are linked to the defense strategy? How will the additional personnel 
be allocated to combat units, support forces, and institutional 
personnel, for functions such as training and acquisition? What are the 
initial and long-term costs to increase the size of the force and how 
does DOD plan to fund this increase? Do the services have detailed 
implementation plans to manage potential challenges such as recruiting 
additional personnel, providing facilities, and procuring new 
equipment? 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-397T]. 

To view the full product, click on the link above. For more 
information, contact Janet A. St. Laurent at (202) 512-4402 or 
stlaurentj@gao.gov. 

[End of Section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Department of Defense's 
(DOD) processes for determining force structure and military personnel 
requirements for the Army and Marine Corps. The war in Iraq, along with 
continuing operations in Afghanistan and elsewhere in the world, have 
led to significant stress on U.S. ground forces and have raised 
questions about whether they are appropriately sized and structured to 
meet the demands of the new security environment. Units are being 
tasked to stay in theater longer than anticipated, and some personnel 
are now embarking on their third overseas deployment since 2001. 
Although the department's 2006 Quadrennial Defense Review (QDR) 
concluded that the Army and Marine Corps should plan to stabilize at a 
level of 482,400 and 175,000 active military personnel respectively, 
the Secretary of Defense recently announced plans to permanently 
increase the size of the active Army and Marine Corps by a total of 
92,000 troops over the next 5 years. Given the significant long-term 
costs associated with such an increase, it is important to understand 
how DOD determines military personnel requirements and the extent to 
which requirements are based on rigorous analysis. As our prior work 
has shown, valid and reliable data about the number of personnel 
required to meet an agency's needs are critical because human capital 
shortfalls can threaten an organization's ability to perform missions 
efficiently and effectively. This is particularly true for the DOD, 
where the lack of rigorous analysis of requirements could have 
significant consequences for military personnel called upon to execute 
military missions or, alternatively, could lead to inefficiencies in 
allocating funds within the defense budget. 

My testimony today will focus on three issues: (1) the processes and 
analyses used by the Office of the Secretary of Defense (OSD) and the 
Army and Marine Corps to assess force structure and military personnel 
levels; (2) the extent to which the services' recently completed 
requirements analyses reflect new demands resulting from the changed 
security environment; and (3) the extent of information provided to 
Congress to support the department's requests for military personnel. 
In light of the recent proposal to permanently increase the size of the 
Army and Marine Corps, my comments will focus largely on requirements 
for active personnel, although the service requirements process I will 
be discussing apply to both the active and reserve components, and our 
prior work has shown that ongoing operations have taken a toll on the 
reserve components as well. A congressionally-mandated commission has 
been tasked to conduct a comprehensive examination of how the National 
Guard and Reserve are used in national defense. This commission's work 
is still ongoing. 

My testimony today is based primarily on our past work on Army and 
Marine Corps force structure and military personnel issues as well as 
our work on human capital and military personnel issues defensewide. A 
list of our past reports can be found in the Related GAO Products 
section at the end of this statement. We updated some of our 
information during recent discussions with Army and Marine Corps 
officials. To obtain these updates we interviewed officials and 
obtained documents from Headquarters, Department of the Army; the U.S. 
Army Center for Army Analysis; Headquarters Marine Corps, Manpower and 
Reserve Affairs; and the Marine Corps Combat Development Command. To 
assess the processes and analyses used by the Office of the Secretary 
of Defense and the Army and Marine Corps to assess force structure and 
military personnel levels, we relied on our past reports on these 
subjects, as well as updated information from Total Army Analysis 08-13 
and Marine Corps force structure plans from the sources noted. To 
assess the extent to which the services' recently completed 
requirements analyses reflect new demands resulting from the changed 
security environment, we relied on our past work, DOD's February 2006 
Quadrennial Defense Review report, the Secretary of Defense's 
congressional testimony announcing his proposal to increase Army and 
Marine Corps force levels, and Total Army Analysis 08-13 and Marine 
Corps force structure plans. To assess the extent of information 
provided to Congress to support the department's requests for military 
personnel, we relied on our past reporting on human capital and end 
strength issues. 

Summary: 

Both OSD and the military services play key roles in determining force 
structure and military personnel requirements and rely on a number of 
complex and interrelated processes and analyses--rather than one 
clearly documented process. Decisions reached by OSD in the QDR, and in 
budget and planning guidance, often set the parameters within which the 
services can determine their own force structure requirements and 
allocate military personnel to meet operational and institutional 
needs. For example, the 2006 QDR determined that the Army would have 42 
active combat brigades and 482,400 active military personnel, and these 
numbers are a "given" in the Army's biennial force structure analysis. 
A major purpose of the Army's biennial analysis is to determine the 
number and types of support forces, such as transportation companies 
and military police units, to support combat forces. Also, if total 
support force requirements exceed available military personnel levels 
approved by OSD, the process helps the Army determine where to accept 
risk. The Army's most recent biennial force structure analysis 
indicated that its total requirements and available military personnel 
levels (for all components) were about equal, although the Army decided 
to reallocate many positions to create more high-demand units, such as 
military police, and reduce numbers of lesser needed units. Similarly, 
the Marine Corps uses a number of modeling, simulation, and other 
analytical tools to identify gaps in its capabilities to perform its 
missions, to identify the personnel and skills needed to provide the 
capabilities using professional judgment, and to assess where to accept 
risk. The Marine Corps has also made changes to the composition and mix 
of its units as a result of its analyses. 

Both the Army and Marine Corps are coping with additional demands that 
may not have been fully reflected in the 2006 QDR or in recent service 
analyses that were based on OSD guidance. These analyses predate the 
Secretary of Defense's recent announcement to increase Army and Marine 
Corps forces by 92,000. However, some of this work, and our own 
assessments, are only months old and should provide a useful baseline 
for helping the committee understand what has changed since the 2006 
QDR and service analyses were completed. First, the Army's most recent 
analysis did not fully consider the impact of converting from a 
division-based force to modular brigades. The Army's recent analysis 
recognized that modular units would require greater numbers of combat 
forces than its prior division-based force and assumed this could be 
accomplished by reducing military positions in the Army's institutional 
forces, such as its command headquarters and training base, rather than 
increasing the size of the active force. In September 2006, we 
questioned whether the Army could reduce sufficient numbers of military 
positions in the institutional force and meet all of its modular force 
requirements with the QDR-directed active end strength of 482,400. 
Second, the Army's analysis assumed that the Army would be able to 
provide 18 to 19 brigades at any one time (including 14 active and 4 to 
5 National Guard brigades) to support worldwide operations. However, 
the Army's global operational demand for forces is currently 23 
brigades and Army officials believe this demand will continue for the 
foreseeable future. The Marine Corps is also supporting a high pace of 
operations that may not have been fully reflected in its recent 
analyses. For example, the 2006 QDR directed the Marine Corps to stand 
up a Special Operations Command requiring about 2,600 military 
personnel, but did not increase the size of the Marine Corps to reflect 
this new requirement. The Marines also are experiencing a higher 
operational tempo than anticipated and standing up specialized units to 
train Iraqi forces, which may not have been fully envisioned in their 
earlier analyses. 

Our past work has also shown that DOD has not provided a clear and 
transparent basis for its military personnel requests to Congress that 
demonstrates how these requests are linked to the defense strategy. We 
believe that it will become increasingly important to demonstrate a 
clear linkage as Congress confronts looming fiscal challenges facing 
the nation and DOD attempts to balance competing priorities for 
resources in personnel, operations, and investments accounts. DOD's 
February QDR 2006 report did not provide much insight into the basis 
for its conclusion that the size of today's forces is appropriate to 
meet current and projected operational demands. Further, the Marine 
Corps' decision to initiate a new study to assess its active military 
requirements shortly after the QDR report was issued is an indication 
that the QDR did not achieve consensus on required military personnel 
levels. In evaluating DOD's proposal to permanently increase active 
Army and Marine Corps personnel levels by 92,000 over the next 5 years, 
Congress should carefully weigh the long-term costs and benefits. While 
the Army and Marine Corps are currently experiencing a high operating 
tempo, increasing personnel levels will entail billions of dollars for 
both start-up and recurring costs, not just for the personnel added to 
the force, but for related equipment and training. Given the 
significant implications of this request, DOD should be prepared to 
fully explain and document the basis for the proposed increases and how 
the additional positions will be used. To help illuminate the basis for 
DOD's request, Congress may wish to consider requiring DOD to answer 
the following questions: What analysis has been done to demonstrate how 
the proposed increases are linked to the defense strategy? How will the 
additional personnel be allocated to combat units, support forces, and 
institutional personnel, for functions such as training and 
acquisition? What are the initial and long-term costs to increase the 
size of the force and how does DOD plan to fund this increase? Do the 
services have detailed implementation plans to manage potential 
challenges, such as recruiting additional personnel, providing 
facilities, and procuring new equipment? Our prior work on recruiting 
and retention challenges, along with our prior reports on challenges in 
equipping modular units, identify some potential challenges that could 
arise in implementing an increase in the size of the Army and Marine 
Corps at a time when the services are supporting ongoing operations in 
Iraq and Afghanistan. 

Background: 

The 2005 National Defense Strategy provided the strategic foundation 
for the 2006 QDR and identified an array of traditional, irregular, 
catastrophic, and disruptive challenges that threaten U.S. interests. 
To operationalize the defense strategy, the 2006 QDR identified four 
priority areas for further examination: defeating terrorist networks, 
defending the homeland, shaping the choices of countries at strategic 
crossroads, and preventing hostile state and non-state actors from 
acquiring or using weapons of mass destruction. These areas illustrated 
the types of capabilities and forces needed to address the challenges 
identified in the defense strategy and helped DOD to assess that 
strategy and review its force planning construct. Changes in the 
security environment and the force planning construct may require DOD 
and the services to reassess force structure requirements--how many 
units and of what type are needed to carry out the national defense 
strategy. Likewise, changing force structure requirements may create a 
need to reassess active end strength---the number of military personnel 
annually authorized by Congress which each service can have at the end 
of a given fiscal year. 

The services allocate their congressionally authorized end strength 
among operational force requirements (e.g., combat and support force 
units), institutional requirements, and requirements for personnel who 
are temporarily unavailable for assignment. Operational forces are the 
forces the services provide to combatant commanders to meet mission 
requirements, such as ongoing operations in Iraq and Afghanistan. 
Institutional forces include command headquarters, doctrine writers, 
and a cadre of acquisition personnel, which are needed to prepare 
forces for combat operations. Personnel who are temporarily unavailable 
for assignment include transients, transfers, holdees, and students. 

The Secretary of Defense's recent proposal to permanently increase the 
size of the Army and Marine Corps represents a significant shift in 
DOD's plans, as reflected in the 2006 QDR. In fiscal year 2004, the 
Army's authorized end strength was 482,400 active military personnel. 
Since that time, the Army has been granted authority to increase its 
end strength by 30,000 in order to provide flexibility to implement its 
transformation to a modular force while continuing to deploy forces to 
overseas operations. Rather than return the Army to the 482,400 level 
by fiscal year 2011, as decided in the 2006 QDR, DOD's new proposal 
would increase the Army's permanent end strength level to 547,000 over 
a period of 5 years. DOD's plans for Marine Corps end strength have 
also changed. In fiscal year 2004, the Marine Corps' was authorized to 
have 175,000 active military personnel. For the current fiscal year, 
Marine Corps end strength was authorized at 180,000, although DOD's 
2006 QDR planned to stabilize the Marine Corps at the 175,000 level by 
fiscal year 2011. The Secretary's new proposal would increase permanent 
Marine Corps end strength to a level of 202,000 over the next 5 years. 
In terms of funding, DOD is currently authorized to pay for end 
strength above 482,400 and 175,000 for the Army and Marine Corps, 
respectively, with emergency contingency reserve funds or from 
supplemental funds used to finance operations in Iraq and Afghanistan. 
Until Congress receives the President's budget request, it is unclear 
how DOD plans to fund the proposed increases. 

In 2004, the Army began its modular force transformation to restructure 
itself from a division-based force to a modular brigade-based force--an 
undertaking it considers the most extensive reorganization of its force 
since World War II. This initiative, according to Army estimates, will 
require an investment exceeding $52 billion through fiscal year 2011. 
The foundation of the modular force is the creation of standardized 
modular combat brigades in both the active component and National 
Guard. The new modular brigades are designed to be self-sufficient 
units that are more rapidly deployable and better able to conduct joint 
and expeditionary operations than their larger division-based 
predecessors. The Army planned to achieve its modular restructuring 
without permanently increasing its active component end strength above 
482,400, in accordance with a decision reached during the 2006 QDR. The 
February 2006 QDR also specified that the Army would create 70 active 
modular combat brigades in its active component and National Guard. 

According to the Army, the modular force will enable it to generate 
both active and reserve component forces in a rotational manner. To do 
this, the Army is developing plans for a force rotation model in which 
units will rotate through a structured progression of increased unit 
readiness over time. For example, the Army's plan is for active service 
members to be at home for 2 years following each deployment of up to 1 
year. 

Determination of Force Structure and Military Personnel Requirements Is 
A Complex Process Involving Both OSD And The Services: 

Both OSD and the military services play key roles in determining force 
structure and military personnel requirements and rely on a number of 
complex and interrelated process and analyses--rather than on one 
clearly documented process. Decisions made by OSD can have a ripple 
effect on the analyses that are conducted at the service level, as I 
will explain later. 

OSD is responsible for the QDR--the official strategic plan of DOD--and 
provides policy and budget guidance to the services on the number of 
active personnel. The QDR determines the size of each services' 
operational combat forces based on an analysis of the forces needed to 
meet the requirements of the National Defense Strategy. For example, 
the 2006 QDR specified the Army's operational force structure would 
include 42 active Brigade Combat Teams and that the Army should plan 
for an active force totaling 482,400 personnel by fiscal year 2011. The 
QDR also directed the Marine Corps to add a Special Operations Command 
and plan for an active force totaling 175,000 military personnel by 
fiscal year 2011. 

In order to provide a military perspective on the decisions reached in 
the QDR, Congress required the Chairman of the Joint Chiefs of Staff to 
conduct an assessment of the review including an assessment of risk. In 
his assessment of the 2006 QDR, the Chairman concluded that the Armed 
Forces of the United States stood "fully capable of accomplishing all 
the objectives of the National Defense Strategy." In his risk 
assessment, he noted that the review had carefully balanced those areas 
where risk might best be taken in order to provide the needed resources 
for areas requiring new or additional investment. 

Another area where the Office of the Secretary of Defense plays an 
important role is in developing various planning scenarios that 
describe the type of missions the services may face in the future. 
These scenarios are included in planning guidance that the Office of 
the Secretary of Defense provides the services to assist them in making 
more specific decisions on how to allocate their resources to 
accomplish the national defense strategy. For example, these scenarios 
would include major combat operations, stability operations, domestic 
support operations, and humanitarian assistance operations. 

GAO examined whether DOD had established a solid foundation for 
determining military personnel requirements. While we are currently 
reviewing the plans and analyses of the 2006 QDR, our February 2005 
assessment of DOD's processes identified several concerns that, if left 
uncorrected, could have hampered DOD's QDR analysis.[Footnote 1] First, 
we found that DOD had not conducted a comprehensive, data-driven 
analysis to assess the number of active personnel needed to implement 
the defense strategy. Second, OSD does not specifically review the 
services' requirements processes to ensure that decisions about 
personnel levels are linked to the defense strategy. Last, a key reason 
why OSD had not conducted a comprehensive analysis was that it has 
sought to limit personnel costs to fund competing priorities such as 
transformation. 

The Army Has a Biennial Process to Assess Force Structure and Allocate 
Military Personnel Positions to Units: 

The Army uses a biennial, scenario-based requirements process to 
estimate the number and types of operational and institutional forces 
needed to execute Army missions. This process involves first 
determining the number and type of forces needed to execute the 
National Military Strategy based on OSD guidance, comparing this 
requirement with the Army's present force structure, and finally 
reallocating military positions to minimize the risks associated with 
any identified shortfalls. Taken together, this process is known as 
"Total Army Analysis." The Army has conducted this analysis for many 
years and has a good track record for updating and improving its 
modeling, assumptions, and related processes over time, as we noted in 
our last detailed analysis of the Army's process.[Footnote 2] Active 
and reserve forces are included in this analysis in order to provide a 
total look at Army requirements and the total end strength available to 
resource those requirements. Also, the number of combat brigades is 
specified by OSD in the QDR and is essentially a "given" in the Army's 
requirements process. The Army's process is primarily intended to 
assess the support force structure needed to meet the requirements of 
the planning scenarios, and to provide senior leadership a basis for 
better balancing the force. 

In the first phase of the Army's requirements determination process, 
the Army uses several models, such as a model to simulate warfights 
using the scenarios provided by OSD and the number of brigades OSD 
plans to use in each scenario. The outcomes of the warfighting analyses 
are used in further modeling to generate the number and specific types 
of units the Army would need to support its brigade combat teams. For 
example, for a prolonged major war, the Army needs more truck companies 
to deliver supplies and fuel to front line units. For other types of 
contingencies, the Army may use historical experience for similar 
operations to determine requirements since models are not available for 
all contingencies. The Army also examines requirements for the Army's 
institutional force, such as the Army's training base, in order to 
obtain a total bottom line requirement for all the Army's missions. 

In the second phase of the Army's process--known as the "resourcing 
phase"--the Army makes decisions on how to best allocate the active and 
reserve military personnel levels established by OSD against these 
requirements. In order to provide the best match, the Army will develop 
a detailed plan to eliminate lower priority units, and stand up new 
units it believes are essential to address capability gaps and meet 
future mission needs. For example, in recent years, the Army has made 
an effort to increase units needed for military police, civil affairs, 
engineers, and special operations forces. These decisions are 
implemented over the multiple years contained in DOD's Future Years 
Defense Program. For example, the intent of the Army's most recent 
analysis was used to help develop the Army's budget plans for fiscal 
years 2008-2013. 

Historically, the Army has had some mismatches between the requirements 
it estimated and its available military personnel levels. When 
shortfalls exist, the Army has chosen to fully resource its active 
combat brigades and accept risk among it support units, many of which 
are in the reserve component. 

The Marine Corps Conducts a Variety of Analyses to Assess Force 
Structure and Military Personnel Requirements: 

The Marine Corps uses a number of modeling, simulations, spreadsheet 
analyses, and other analytical tools to periodically identify gaps in 
its capabilities to perform its missions, and identify the personnel 
and skills needed to provide the capabilities based largely on the 
professional judgment of manpower experts and subject-matter experts. 
The results are summarized in a manpower document, updated as needed, 
which is used to allocate positions and personnel to meet mission 
priorities. This document is an assessment of what core capabilities 
can and cannot be supported within the authorized end strength, which 
may fall short of the needed actual personnel requirements. For 
example, in 2005, we reported that the Marine Corps analysis for fiscal 
year 2004 indicated that to execute its assigned missions, the Corps 
would need about 9,600 more personnel than it had on hand. At the time 
of this analysis, OSD fiscal guidance directed the Marine Corps to plan 
for an end strength of 175,000 in the service's budget submission. 

New Demands on Services Have Not Been Fully Reflected In Recent 
Requirements Analyses: 

Both the Army and Marine Corps are coping with additional demands that 
may not have been fully reflected in the QDR or their own service 
requirements analyses, which have been based on OSD guidance. While the 
Army's most recent analysis, completed in 2006, concluded that Army 
requirements were about equal to available forces for all three 
components, this analysis did not fully reflect the effects of 
establishing modular brigades--the most significant restructuring of 
the Army's operational force structure since World War II. In addition, 
OSD-directed planning scenarios used by the Army in its analysis to 
help assess rotational demands on the force may not have reflected real-
world conditions such as those in Iraq and Afghanistan. While the 
requirements phase of the Army's analysis, completed in the mid-2005 
time frame, may have been based on the best information available at 
the time, the Army's transformation concepts have continued to evolve 
and the mismatch between the planning scenarios and actual operations 
are now more apparent. The Marine Corps is also undergoing a high pace 
of operations, as well as QDR-directed changes in force structure. This 
has caused the Marine Corps to initiate a new post-QDR analysis of its 
force structure requirements. 

The service analyses I am about to discuss all preceded the Secretary 
of Defense's announcement of his intention to increase Army and Marine 
Corps end strength by 92,000. However, some of GAO's reporting on these 
plans is only months old and should provide a baseline to help the 
committee understand what has changed since the 2006 QDR and service 
analyses were completed. 

Army's Most Recent Biennial Analysis Did Not Fully Consider 
Requirements for Modular Units and Force Rotation Demands: 

The Army's most recent requirements analysis, which examined force 
structure and military personnel needs for fiscal years 2008 through 
2013, considered some of the Army's new transformation concepts, such 
as the Army's conversion to a modular force. However, the Army did not 
consider the full impact of this transformation in its analysis, in 
part because these initiatives were relatively new at the time the 
analysis was conducted. The Army's recent analysis recognized that 
modular units would require greater numbers of combat forces than its 
prior division-based force and assumed this could be accomplished by 
reducing military positions in the Army's institutional forces, such as 
its command headquarters and training base, rather than increasing the 
size of the active force. However, in our September 2006 report 
discussing the Army's progress in converting to a modular force, we 
questioned whether the Army could meet all of its modular force 
requirements with a QDR-directed, active component end strength of 
482,400.[Footnote 3] Under its new modular force, the Army will have 42 
active brigades compared with 33 brigades in its division-based force. 
In total, these brigades will require more military personnel than the 
Army's prior division-based combat units. Therefore, as figure 1 
illustrates, the Army planned to increase its active component 
operational force--that is, its combat forces--from 315,000 to 355,000 
personnel to fully staff 42 active modular brigade combat teams. To 
accomplish this with an active end strength level of 482,400, the Army 
had hoped to substantially reduce the size of its active component 
institutional force--that is, its training base, acquisition workforce, 
and major command headquarters--from 102,000 to 75,000 military 
personnel. The Army also planned to reduce the number of active Army 
personnel in a temporary status at any given time, known as transients, 
transfers, holdees, and students, or TTHS. In fiscal year 2000, this 
portion of the force consisted of 63,000 active military personnel and 
the Army planned to reduce its size to 52,400. 

Figure 1: A Comparison of Active Army End Strength Allocations before 
and after the Modular Force Conversion: 

[See PDF for image] 

Source: GAO analysis of Army data. 

[End of figure] 

While the Army has several initiatives under way to reduce active 
military personnel in its institutional force, our report questioned 
whether those initiatives could be fully achieved as planned. The Army 
had made some progress in converting some military positions to 
civilian positions, but Army officials believed additional conversions 
to achieve planned reductions in the noncombat force would be 
significantly more challenging to achieve and could lead to difficult 
trade-offs. In addition, cutting the institutional force at a time when 
the Army is fully engaged in training forces for overseas operations 
may entail additional risk not fully anticipated at the time the 
initiatives were proposed. Last, we noted that the Army is still 
assessing its modular unit concepts based on lessons learned from 
operations in Iraq and Afghanistan and other analyses led by the Army's 
Training and Doctrine Command, and the impact on force structure 
requirements may not yet be fully known. 

We should note that, at the time of our report, the Army did not agree 
with our assessment of its personnel initiatives. In written comments 
on a draft of our report, the Army disagreed with our analysis of the 
challenges it faced in implementing its initiatives to increase the 
size of the operational force within existing end strength, noting that 
GAO focused inappropriate attention on these challenges. The Army only 
partially concurred with our recommendation that the Secretary of the 
Army develop and provide the Secretary of Defense and Congress with a 
report on the status of its personnel initiatives, including executable 
milestones for realigning and reducing its noncombat forces. The Army 
stated that this action was already occurring on a regular basis and 
another report on this issue would be duplicative and irrelevant. 
However, the reports the Army cited in its response were internal to 
the Army and the Office of the Secretary of Defense. The comments did 
not address the oversight needs of Congress. We stated in our report 
that we believe that it is important for the Secretary of Defense and 
Congress to have a clear and transparent picture of the personnel 
challenges the Army faces in order to fully achieve the goals of 
modular restructuring and make informed decisions on resources and 
authorized end strength. 

Another factor to consider is that the Army's most recent requirements 
analysis was linked to planning scenarios directed by OSD and did not 
fully reflect current operational demands for Iraq and Afghanistan. The 
Army's analysis assumed that the Army would be able to provide 18 to 19 
brigades at any one time (including 14 active and 4 to 5 National Guard 
brigades) to support worldwide operations. However, the Army's global 
operational demand for forces is currently 23 brigades and Army 
officials believe this demand will continue for the foreseeable future. 

The Marine Corps Is Also Facing New Demands That May Not Have Been 
Fully Reflected in Recent Requirements Analyses: 

The Marine Corps is also experiencing new missions and demands as a 
result of the Global War on Terrorism. However, these new requirements 
do not appear to have been fully addressed in its requirements 
analyses. The following is a summary of the principal analyses that 
were undertaken to address Marine Corps force structure personnel 
requirements in the past few years. 

* In 2004, the Marine Corps established a Force Structure Review Group 
to evaluate what changes in active and reserve capabilities needed to 
be created, reduced, or deactivated in light of personnel tempo trends 
and the types of units in high demand since the Global War on 
Terrorism. As a result of this review, the Marine Corps approved a 
number of force structure changes including increases in the active 
component's infantry, reconnaissance, and gunfire capabilities and 
decreases in the active component's small-craft company and low- 
altitude air defense positions. However, this review was based on the 
assumption that the Marine Corps would need to plan for an end strength 
of 175,000 active personnel. As a result, the Marine Corps' 2004 review 
focused mostly on rebalancing the core capabilities of the active and 
reserve component rather than a bottom-up review of total personnel 
requirements to meet all 21st century challenges. 

* In March 2006, shortly after the QDR was issued, the Marine Corps 
Commandant formed a Capabilities Assessment Group to assess 
requirements for active Marine Corps military personnel. One of the 
group's key tasks was to determine how and whether the Marine Corps 
could meet its ongoing requirements while supporting the QDR decision 
to establish a 2,600 personnel Marine Corps Special Operations Command. 
The group was also charged with identifying what core capabilities 
could be provided at a higher end strength level of 180,000. We 
received some initial briefings on the scope of the group's work. 
Moreover, Marine Corps officials told us that the group completed its 
analysis in June 2006. However, as of September 2006 when we completed 
our work, the Marine Corps had not released the results of its 
analysis. Therefore, it is not clear whether and to what extent this 
review formed the basis for the President's recent announcement to 
permanently expand the size of the active Marine Corps. 

DOD Has Not Clearly Demonstrated the Basis For Military Personnel 
Requests: 

Our past work has also shown that DOD has not provided a clear and 
transparent basis for its military personnel requests to Congress, 
requests that demonstrate a clear link to military strategy. Ensuring 
that the department provides a sound basis for military personnel 
requests and can demonstrate how they are linked to the military 
strategy will become increasingly important as Congress confronts 
looming fiscal challenges facing the nation. During the next decade, 
Congress will be faced with making difficult trade-offs among defense 
and nondefense-related spending. Within the defense budget, it will 
need to allocate resources among the services and their respective 
personnel, operations, and investment accounts while faced with 
multiple competing priorities for funds. DOD will need to ensure that 
each service manages personnel levels efficiently since personnel costs 
have been rising significantly over the past decade. We have previously 
reported that the average cost of compensation (including cash, non- 
cash, and deferred benefits) for enlisted members and officers was 
about $112,000 in fiscal year 2004.[Footnote 4] The growth in military 
personnel costs has been fueled in part by increases in basic pay, 
housing allowances, recruitment and retention bonuses, incentive pay 
and allowances, and other special pay. Furthermore, DOD's costs to 
provide benefits, such as health care, have continued to spiral upward. 

As noted earlier, we have found that valid and reliable data about the 
number of personnel required to meet an agency's needs are critical 
because human capital shortfalls can threaten an agency's ability to 
perform its missions efficiently and effectively. Data-driven 
decisionmaking is one of the critical factors in successful strategic 
workforce management. High-performing organizations routinely use 
current, valid, and reliable data to inform decisions about current and 
future workforce needs. In addition, they stay alert to emerging 
mission demands and remain open to reevaluating their human capital 
practices. In addition, federal agencies have a responsibility to 
provide sufficient transparency over significant decisions affecting 
requirements for federal dollars so that Congress can effectively 
evaluate the benefits, costs, and risks. 

DOD's record in providing a transparent basis for requested military 
personnel levels can be improved. We previously reported that DOD's 
annual report to Congress on manpower requirements for fiscal year 2005 
broadly stated a justification for DOD's requested active military 
personnel, but did not provide specific analyses to support the 
justification. In addition, DOD's 2006 QDR report did not provide 
significant insight into the basis for its conclusion that the size of 
today's forces--both the active and reserve components across all four 
military services--is appropriate to meet current and projected 
operational demands. Moreover, the Marine Corps' decision to initiate a 
new study to assess active military personnel requirements shortly 
after the 2006 QDR was completed is an indication that the QDR did not 
achieve consensus in required end strength levels. 

In evaluating DOD's proposal to permanently increase active Army and 
Marine Corps personnel levels by 92,000 over the next 5 years, Congress 
should carefully weigh the long-term costs and benefits. It is clear 
that Army and Marine Corps forces are experiencing a high pace of 
operations due to both the war in Iraq and broader demands imposed by 
the Global War on Terrorism that may provide a basis for DOD to 
consider permanent increases in military personnel levels. However, it 
is also clear that increasing personnel levels will entail significant 
costs that must be weighed against other priorities. The Army has 
previously stated that it costs about $1.2 billion per year to increase 
active military personnel levels by 10,000. Moreover, equipping and 
training new units will require billions of additional dollars for 
startup and recurring costs. 

DOD has not yet provided a detailed analysis to support its proposal to 
permanently increase the size of the Army and Marine Corps. Given the 
significant implications for the nation's ability to carry out its 
defense strategy along with the significant costs involved, additional 
information will be needed to fully evaluate the Secretary of Defense's 
proposal. 

To help illuminate the basis for its request, DOD will need to provide 
answers to the following questions: 

* What analysis has been done to demonstrate how the proposed increases 
are linked to the defense strategy? To what extent are the proposed 
military personnel increases based on supporting operations in Iraq 
versus an assessment of longer-term requirements? 

* How will the additional personnel be allocated to combat units, 
support forces, and institutional personnel, for functions such as 
training and acquisition? 

* What are the initial and long-term costs to increase the size of the 
force and how does the department plan to fund this increase? 

* Do the services have detailed implementation plans to manage 
potential challenges such as recruiting additional personnel, providing 
facilities, and procuring new equipment? 

Our prior work on recruiting and retention challenges, along with our 
prior reports on challenges in equipping modular units, identify some 
potential challenges that could arise in implementing an increase in 
the size of the Army and Marine Corps at a time when the services are 
supporting ongoing operations in Iraq and Afghanistan. For example, we 
have reported that 19 percent of DOD's occupational specialties for 
enlisted personnel were consistently overfilled while other 
occupational specialties were underfilled by 41 percent for fiscal 
years 2000 through 2005.[Footnote 5] In addition, we have reported that 
the Army is experiencing numerous challenges in equipping modular 
brigades on schedule, in part due to the demands associated with 
meeting the equipment needs of units deploying overseas.[Footnote 6] 
Such challenges will need to be carefully managed if Congress approves 
the Secretary of Defense's proposal. 

Mr. Chairman and members of the subcommittee, this concludes my 
prepared remarks. I would be happy to answer any questions you may 
have. 

Contacts and Acknowledgments: 

For questions about this statement, please contact Janet St. Laurent at 
(202) 512-4402. Other individuals making key contributions to this 
statement include: Gwendolyn Jaffe, Assistant Director; Kelly 
Baumgartner; J. Andrew Walker; Margaret Morgan; Deborah Colantonio; 
Harold Reich; Aisha Cabrer; Susan Ditto; Julie Matta; and Terry 
Richardson. 

[End of section] 

Related GAO Products: 

Force Structure: Army Support Forces Can Meet Two-Conflict Strategy 
With Some Risks. GAO/NSIAD-97-66. Washington, D.C.: Feb. 28, 1997. 

Force Structure: Army's Efforts to Improve Efficiency of Institutional 
Forces Have Produced Few Results. GAO/NSIAD-98-65. Washington, D.C.: 
Feb. 26, 1998. 

Force Structure: Opportunities Exist for the Army to Reduce Risk in 
Executing the Military Strategy. GAO/NSIAD-99-47. Washington, D.C.: 
Mar. 15, 1999. 

Force Structure: Army is Integrating Active and Reserve Combat Forces, 
but Challenges Remain. GAO/NSIAD-00-162. Washington, D.C.: July 18, 
2000. 

Force Structure: Army Lacks Units Needed for Extended Contingency 
Operations. GAO-01-198. Washington, D.C.: Feb. 15, 2001. 

Force Structure: Projected Requirements for Some Army Forces Not Well 
Established. GAO-01-485. Washington, D.C.: May 11, 2001. 

Military Personnel: DOD Needs to Conduct a Data-Driven Analysis of 
Active Military Personnel Levels Required to Implement the Defense 
Strategy. GAO-05-200. Washington, D.C.: Feb. 1, 2005. 

Force Structure: Preliminary Observations on Army Plans to Implement 
and Fund Modular Forces. GAO-05-443T. Washington, D.C.: Mar. 16, 2005. 

Force Structure: Actions Needed to Improve Estimates and Oversight of 
Costs for Transforming Army to a Modular Force. GAO-05-926. Washington, 
D.C.: Sep. 29, 2005. 

Force Structure: Capabilities and Cost of Army Modular Force Remain 
Uncertain. GAO-06-548T. Washington, D.C.: Apr. 4, 2006. 

Force Structure: DOD Needs to Integrate Data into Its Force 
Identification Process and Examine Options to Meet Requirements for 
High-Demand Support Forces. GAO-06-962. Washington, D.C.: Sep. 5, 2006. 

Force Structure: Army Needs to Provide DOD and Congress More Visibility 
Regarding Modular Force Capabilities and Implementation Plans. GAO-06- 
745. Washington, D.C.: Sep. 6, 2006. 

FOOTNOTES 

[1] GAO, Military Personnel: DOD Needs to Conduct a Data-Driven 
Analysis of Active Military Personnel Levels Required to Implement the 
Defense Strategy, GAO-05-200 (Washington, D.C.: Feb. 1, 2005). 

[2] GAO, Force Structure: Projected Requirements for Some Army Forces 
Not Well Established, GAO-01-485 (Washington, D.C.: May 11, 2001). 

[3] GAO, Force Structure: Army Needs to Provide DOD and Congress More 
Visibility Regarding Modular Force Capabilities and Implementation 
Plans, GAO-06-745 (Washington, D.C.: Sept. 6, 2006). 

[4] GAO, Military Personnel: DOD Needs to Improve the Transparency and 
Reassess the Reasonableness, Appropriateness, Affordability, and 
Sustainability of its Military Compensation System, GAO-05-798 
(Washington, D.C.: July 19, 2005). 

[5] GAO, Military Personnel: DOD Needs Action Plan to Address Enlisted 
Personnel Recruitment and Retention Challenges, GAO-06-134 (Washington, 
D.C.: Nov. 17, 2005). 

[6] GAO-06-745. 

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