Budget and Spending:

Differing Scope and Methodology in GAO and University of California Reports Account for Variations in Cost Estimates for Homosexual Conduct Policy

GAO-06-909R: Published: Jul 13, 2006. Publicly Released: Jul 13, 2006.

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Congress requested information concerning differences in cost estimates for implementing the Department of Defense's (DOD) homosexual conduct policy reported by GAO and a University of California Blue Ribbon Commission (Commission). In February 2005, we estimated that the cost to recruit and train replacements for enlisted servicemembers separated under the policy from fiscal years 1994 through 2003 was about $190.5 million. A year later, the Commission estimated that the cost was at least $363.8 million over the same time period--91 percent more than our estimate. This report answers the following questions: (1) What factors contributed to the difference in estimated costs reported by GAO and the Commission? (2) What factors accounted for the difference in estimated enlistee training costs in our 1998 and 2005 reports?

Over 90 percent of the difference between the GAO and Commission cost estimates was in enlistee training costs. Our 2005 report estimated the cost to train replacements for servicemembers separated under the policy over the 10-year period at $95.1 million, while the Commission's estimate was $252.4 million. The differences in estimates are primarily attributable to two items. First, our estimate focused largely on the direct and incremental training costs associated with the specific occupations of servicemembers separated under the policy for the applicable years. The Commission based its estimate on average training costs for all occupations indexed for inflation. Secondly, the Commission's estimate included a significant overhead allocation for things like DOD's overall training infrastructure. As noted below, we do not believe that allocating such fixed costs is appropriate since they represent sunk costs. Additionally, the Commission's estimate included training costs for the Marines, individuals in medical occupations, officers, and out-processing costs for separation travel. As we stipulated in our 2005 report, we did not include costs for the Marines because they were not capable of providing costs by occupational specialty. Additionally, the services could not reasonably estimate training costs for medical personnel and officers, and we did not consider separation travel costs in our analysis. In view of all the above, we stand behind our estimate of $95.1 million. Although our 1998 and 2005 reports both dealt, in part, with enlistee training costs, the reports answered different questions, addressed different populations, covered different time frames, and used different parameters to compute training cost estimates. In 1998, we estimated the average cost of training an enlistee (basic and initial skills training) at $28,800, which the Commission converted to $33,372 in 2004 dollars in its analysis of the cost of DOD's homosexual conduct policy. The estimated per-member training cost for the occupations performed by servicemembers separated under the policy in our 2005 report was $18,000 for the Navy, $7,400 for the Air Force, and $6,400 for the Army. These estimated costs are significantly lower than the Commission's estimate because they are primarily based on direct and incremental training costs.

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