This is the accessible text file for GAO report number GAO-06-909R 
entitled 'Differing Scope and Methodology in GAO and University of 
California Reports Account for Variations in Cost Estimates for 
Homosexual Conduct Policy' which was released on July 13, 2006. 

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July 13, 2006: 

The Honorable Edward M. Kennedy: 
United States Senate: 

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

Dear Senator Kennedy: 

You 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,[Footnote 1] 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,[Footnote 2] 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[Footnote 3] and 2005 reports? 

Difference in GAO and Commission Cost Estimates: 

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. 

As we disclosed in our 2005 report, for privacy reasons, we did not 
review separated servicemembers' personnel records, including their 
training histories. Instead, we used military specialty codes[Footnote 
4] to match separated servicemembers to specific occupations. Relevant 
factors regarding this population--such as occupation, rank, length of 
service, and skill level--contributed to enlistee training cost 
averages for this finite group of individuals that were much lower than 
DOD-wide training cost averages for all enlistees. For example, over 
one-half of separated servicemembers had the rank of E2 or below and 
about one-third served in the military for 6 months or less, thereby 
limiting the amount of training completed. Additionally, about 30 
percent of servicemembers separated over the 10-year period were in the 
occupational category "Not Occupationally Qualified, General," 
indicating that they had not completed occupational training, been 
assigned to an occupation, or allowed to perform in an occupation on 
their own. We relied on the expertise and knowledge of the training 
commands in each service for case-by-case estimates of per-member 
training costs for separated servicemembers. For example, 
servicemembers classified by DOD as "Not Occupationally Qualified, 
General" were given credit for completing basic training in our 
analysis. Also, the training costs for each occupation were weighted by 
the number of servicemembers discharged in each occupation. As a 
result, occupations that had more servicemembers received more weight. 

The Commission used in its analysis a DOD-wide training cost estimate 
from our 1998 report for the average cost of basic plus initial skills 
training for all enlistees in all occupations. Because this estimate 
includes costs for the entire training infrastructure, its use results 
in a much higher estimate. Infrastructure costs remain constant 
regardless of the number of individuals trained and represent sunk 
costs that exist whether enlistees complete their contract terms or 
not. The Commission also computed the value lost to the military by 
calculating a monthly return on the military's investment in training 
for service after training and before discharge. The Commission 
reported enlisted training costs of $331.9 million, which were offset 
by their estimated return on investment of $79.5 million; therefore, 
the cost to the military was $252.4 million. 

Difference in Training Cost Estimates in Our 1998 and 2005 Reports: 

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. 

Our 1998 estimate was designed to determine the extent of DOD's 
investment in recruiting and training first-term enlistees. The 
estimate includes total infrastructure costs for all services combined 
and was intended to demonstrate the magnitude of the cost of training 
all recruits (hundreds of thousands each year) and the potential loss 
when attrition rates are high. Average enlistee training costs were 
computed as a straight average by dividing the total costs of training 
by the total number of new enlistees. Including total infrastructure 
costs was not appropriate for our 2005 estimate since individuals 
separated for homosexual conduct represent such a small proportion of 
the active force (about 950 per year over the 10-year period). Our 2005 
estimates were designed to identify costs over a 10-year period for 
training replacements by occupational specialty for those separated 
under the policy. 

We are sending copies of this report to the Secretary of Defense and 
other interested parties. We will provide copies to others upon 
request. In addition, the report is available at no charge on the GAO 
Web site at [Hyperlink,]. 

If you or your staff have any questions about this report, please 
contact Derek Stewart at (202) 512-5559 or Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. 

Sincerely yours, 

Signed by: 

David M. Walker: 
Comptroller General of the United States: 



[1] GAO, Military Personnel: Financial Costs and Loss of Critical 
Skills Due to DOD's Homosexual Conduct Policy Cannot Be Completely 
Estimated, GAO-05-299 (Washington, D.C.: Feb. 23, 2005). 

[2] University of California Blue Ribbon Commission, "Financial 
Analysis of 'Don't Ask, Don't Tell': How much does the gay ban cost?" 
(Santa Barbara, Calif.: Feb. 14, 2006). 

[3] GAO, Military Attrition: Better Data, Coupled With Policy Changes, 
Could Help the Services Reduce Early Separations, GAO/NSIAD-98-213 
(Washington, D.C.: Sept. 15, 1998). 

[4] Military specialty codes are elements of the enlisted 
classification structure that identify an individual position or group 
of closely related positions by service on the basis of the duties 
involved. The term used to designate a military specialty differs 
according to the military service concerned, such as "military 
occupational specialty," used by the Army and Marine Corps; "Air Force 
specialty," used by the Air Force; and "Navy enlisted classification," 
used by the Navy.

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