Defense: Military Personnel Costs (2011-37)
Year Identified: 2011
Area Number: 37
Area Type: Cost Savings & Revenue Enhancement
◐- Partially Addressed
○- Not Addressed
◉- Consolidated or Other
⊘- Closed-Partially Addressed
⊗- Closed-Not Addressed
Last Updated:March 21, 2018
The Department of Defense (DOD) could recognize long-term cost avoidance by addressing in a compensation strategy what types of compensation are effective, and not incurring costs for compensation that may not be effective, in helping the department achieve its recruiting and retention goals.
DOD has taken some steps to evaluate the effectiveness of specific pay and benefits included in military compensation, as GAO suggested in March 2011, but has not comprehensively assessed the effectiveness of its mix of pays and benefits and used the results to develop a compensation strategy. GAO is closing this action as unaddressed for several reasons.
First, instead of pursuing a comprehensive strategy, DOD has been addressing specific aspects of compensation, according to DOD officials, including the following examples:
- In January 2017 the department completed a study to review how military compensation compares to private sector compensation. A DOD official said this effort was intended to determine whether changes should be made to the department’s process for determining pay raises, including whether the department should continue to set regular military compensation at the 70th percentile of private sector compensation. The official added that the findings of this study will be considered as part of the annual budgeting and pay raise setting discussions.
- The department is implementing changes to the military retirement system, which will allow servicemembers covered under the Blended Retirement System who have at least 2 but fewer than 20 years of service when departing the military to have a portable retirement benefit. According to a DOD official, as of January 2017, eligible servicemembers were being provided with training on the new system, and the transition to the new system for eligible servicemembers occurred on January 1, 2018.
- Lastly, the department continues to review the effectiveness of special and incentive pays by developing a compensation analysis model. According to DOD officials, the intent is for the department to use the results of this review to help inform the amounts and levels of bonus pay. The department is awaiting the RAND Corporation’s final report on this effort.
Second, since GAO suggested this action, GAO has recommended other actions that speak to the same issues but focus on specific compensation programs. (For progress on these actions, see Department of Defense Special and Incentive Pays.)
Third, Congress established the Military Compensation and Retirement Modernization Commission in the National Defense Authorization Act for fiscal year 2013. This commission was established to assess the military compensation and retirement systems. In February 2015, the Commission submitted to Congress a set of recommendations, largely focused on changes to the military health system and military retirement. However, the Commission did not recommend overarching changes to military compensation structure. As such, DOD officials believe that the Commission has “validated” the current military compensation structure.
GAO has closed this action as not addressed and will no longer track implementation.